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-(Figure: The Aggregate Consumption Function and Planned Aggregate Expenditure)Use Figure: The Aggregate Consumption Function and Planned Aggregate Expenditure.If expected disposable income decreases in this economy,then the:

Question

Use the following to answer questions: 
-(Figure: The Aggregate Consumption Function and Planned Aggregate Expenditure)Use Figure: The Aggregate Consumption Function and Planned Aggregate Expenditure.If expected disposable income decreases in this economy,then the:

Quizplus · Accepted Answer

If expected disposable income decreases, households will reduce their consumption spending. This will shift the consumption function downward, resulting in a lower level of planned aggregate expenditure at each level of income. Therefore, the planned aggregate expenditure curve will shift down.

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