If the level of autonomous spending decreases at a given price level,
A)the aggregate expenditure line shifts upward; the economy moves along the aggregate demand curve
B)the aggregate expenditure line shifts downward; the economy moves along the aggregate demand curve
C)the aggregate expenditure line shifts upward; the aggregate demand curve shifts to the right
D)the aggregate expenditure line shifts downward; the aggregate demand curve shifts to the left
E)the aggregate expenditure curve shifts downward; the aggregate demand curve shifts to the right

Question

Quizplus · Accepted Answer

A decrease in autonomous spending (such as a decrease in consumption or investment) would result in a downward shift of the aggregate expenditure line. This means that at any given price level, there is a lower level of aggregate expenditure. This would cause a leftward shift of the aggregate demand curve as a lower level of aggregate expenditure would result in lower demand for goods and services. Therefore, the correct option is D)the aggregate expenditure line shifts downward; the aggregate demand curve shifts to the left.

If the Level of Autonomous Spending Decreases at a Given