-Refer to Exhibit 10-7.If autonomous consumption increases,which of the following is possible? A) The AD curve will shift rightward from AD₁ to AD₂,the price level will remain constant,and Real GDP will rise. B) The AD curve will shift leftward from AD₄ to AD₃,the price level will fall,and Real GDP will remain constant. C) The AD curve will shift rightward from AD₃ to AD₄,the price level will remain constant,and Real GDP will rise. D) The AD curve will shift rightward from AD₁ to AD_2, the price level will rise,and Real GDP will remain constant.

Question

Quizplus · Accepted Answer

An increase in autonomous consumption will shift the AD curve to the right, leading to an increase in Real GDP. The price level will remain constant if the economy is operating at full employment.