The aggregate demand line shifts parallel upwards. The reason behind this is:
Autonomous Investment increase
The correct answer is Autonomous Investment increase.
Autonomous investment refers to investment that occurs regardless of income levels. An increase in autonomous investment, such as government spending on infrastructure or private sector investment in new projects, leads to an upward shift in the aggregate demand (AD) curve.
This shift results in higher levels of output and employment, stimulating economic growth.
Important Questions from Determination of Income and Employment
If the marginal propensity to consume is 0.8, the value of the investment multiplier will be:
Increase in income Rs. 2000 crore and MPC = 0.8. How much increase in investment?
Match List-I with List-II.
List-I List-II A. Income increases, Demand increases I. Complementary Goods B. Income increases, Demand decreases II. Substitute Goods C. Demand varies directly with the price of the related good III. Inferior Goods D. Goods consumed together IV. Normal Goods Choose the correct answer from the options given below:
If Marginal Propensity to Consume (MPC) is 0.75, what will be the value of Investment Multiplier?
Which of the following curve is graphically depicted by a 45° line passing through the origin?
