-In the Above Figure the Economy Is Initially at Point

question 154

Multiple Choice

-In the above figure the economy is initially at point A on aggregate expenditure curve AE₀. Suppose firms expect profits to increase and decide to increase investment. As a result

• A) there is a movement along AE₁ to a point such as C.
• B) the AE curve shifts downward to a curve such as AE₁.
• C) the AE curve shifts upward to a curve such as AE₂.
• D) there is a movement along AE₁ to a point such as B.

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