What is the effect of an increase in investment? When investment increases, O A. aggregate demand increases and income increases. The increase in income induces an increase in consumption expenditure so aggregate demand increases by more than the initial increase in investment O B. aggregate demand increases and aggregate supply increases investment O C. aggregate demand increases by an amount equal to the increase O D. aggregate supply increases. The increase in aggregate supply is greater than the increase in investment because capital increases, which increases potential GDP
What is the effect of an increase in investment? When investment increases, O A. aggregate demand increases and income increases. The increase in income induces an increase in consumption expenditure so aggregate demand increases by more than the initial increase in investment O B. aggregate demand increases and aggregate supply increases investment O C. aggregate demand increases by an amount equal to the increase O D. aggregate supply increases. The increase in aggregate supply is greater than the increase in investment because capital increases, which increases potential GDP
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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