What will happen to Aggregate Demand curve in case Autonomous Investment of an economy increases?
Answer & explanation
Correct answer: option 1
The correct answer is option (1) : Aggregate Demand curve will shift in parallel upwards
When the autonomous investment of an economy increases, the Aggregate Demand (AD) curve will shift in parallel upwards. This is because an increase in autonomous investment leads to an increase in overall spending in the economy, which, in turn, leads to an increase in aggregate demand. The AD curve shows the relationship between the overall price level and the quantity of goods and services demanded, and an increase in autonomous investment contributes to increased demand at all price levels, resulting in an upward shift of the AD curve.