In the Keynesian Cross Diagram,a Decline in Autonomous Consumer Expenditure

question 51

Multiple Choice

In the Keynesian cross diagram,a decline in autonomous consumer expenditure causes the aggregate demand function to shift down,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:

Chequing Account

A bank account that allows the holder to make deposits, withdrawals, and payments via cheques and is typically used for everyday transactions.

Paycheque

A check issued to an employee for earned wages, representing the net amount after deductions such as taxes and social security contributions.

Compensating Balances

A minimum bank account balance a borrower is required to maintain as part of a loan agreement, offering the bank some security.

Transactional Motive

The transactional motive is the need to hold cash for the purpose of conducting day-to-day business operations, such as paying wages and suppliers.