An Increase in Autonomous Consumer Expenditure Causes the Aggregate Demand

question 26

Multiple Choice

An increase in autonomous consumer expenditure causes the aggregate demand function to shift up, the equilibrium level of aggregate output to ________, and the IS curve to shift to the ________, everything else held constant.

• A) rise; left
• B) rise; right
• C) fall; left
• D) fall; right

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Definitions:

Withdraw

The action of removing funds from an account, or the decision to exit from a particular position or investment.

Interest Rate

The percentage charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage of the principal.

Invest Today

The act of allocating resources, usually money, in the present with the expectation of receiving future returns or benefits.

Present Value

The value today of a future sum of money or cash flow sequence, discounted at a particular rate of return.