Figure 13-1 -Refer to Figure 13-1.Ceteris paribus,an increase in firms' expectations of the future profitability of investment spending would be represented by a movement from A)AD₁ to AD₂. B)AD₂ to AD₁. C)point A to point B. D)point B to point A.

Question

Quizplus · Accepted Answer

An increase in firms' expectations of the future profitability of investment spending would cause them to increase investment spending. This would shift the AD line to the right from AD₁ to AD₂.

Figure 13-1 -Refer to Figure 13-1.Ceteris Paribus,an Increase in Firms' Expectations of Firms