Practicing Success
Given $AD=\overline{C}+\overline{I}+c.Y$, change in autonomous consumption will lead to : (A) Change in equilibrium level of income Choose the correct answer from the options given below: |
(D) Only (A) and (B) Only (C) and (D) Only (B) and (E) Only |
(A) and (B) Only |
The correct answer is (A) and (B) Only. A change in autonomous consumption will lead to both a change in aggregate demand and a change in the equilibrium level of income. This is because autonomous consumption is a component of aggregate demand, so a change in autonomous consumption will shift the aggregate demand curve. As a result, the equilibrium level of income will also change. |