Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Determination of Income and Employment

Question:

In the given figure what will happen to aggregate demand curve (AD) when autonomous investment increases.

Options:

AD curve shifts in parallel downwards

AD curve does not shift

AD curve shifts in parallel upwards

AD curve shifts not in parallel upwards

Correct Answer:

AD curve shifts in parallel upwards

Explanation:

The correct answer is option (3) : AD curve shifts in parallel upwards

Explanation : when autonomous investment increases, it leads to an increase in aggregate demand. This shift is typically represented as an upward parallel shift of the aggregate demand (AD) curve.