Suppose that a pair of graphs represents a situation in which both the aggregate expenditure line and the aggregate demand curve have shifted.You can conclude that the shift of the aggregate expenditure line was caused by a change in
A)disposable income
B)the price level
C)the level of income
D)autonomous investment
E)the level of real GDP

Question

Quizplus · Accepted Answer

If both the aggregate expenditure line and the aggregate demand curve have shifted, it means there has been a change in both autonomous expenditure (which causes a shift in the aggregate expenditure line) and one or more of the components of aggregate demand (which causes a shift in the aggregate demand curve). Of the options given, autonomous investment is the only variable directly related to autonomous expenditure, and therefore the best choice. The change in autonomous investment could have been caused by changes in technology, business confidence, or other factors that affect investment decisions.

Suppose That a Pair of Graphs Represents a Situation in Which