An increase in autonomous spending leads to higher ________.
A)inflation
B)output
C)real interest rate
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

Autonomous spending refers to spending that is not influenced by changes in income or prices, such as government spending or investment. An increase in autonomous spending leads to an increase in aggregate demand, which in turn leads to an increase in output (i.e., Gross Domestic Product or GDP). However, it does not necessarily lead to an increase in inflation or the real interest rate, as these variables depend on a variety of other factors in the economy.

An Increase in Autonomous Spending Leads to Higher ________