If there is a decline in world autonomous consumption ________.
A)the domestic real interest rate would fall
B)domestic investment would rise
C)net exports would fall
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

A decline in world autonomous consumption would lead to a decrease in aggregate demand, which would in turn lead to a fall in the domestic real interest rate. This would make it cheaper for domestic firms to borrow money and invest, which would lead to an increase in domestic investment. The fall in aggregate demand would also lead to a decrease in net exports, as domestic consumers would be buying less from abroad.

If There Is a Decline in World Autonomous Consumption ________