A decrease in investment will shift the Aggregate Expenditure (AE) line downward and shift the Aggregate Demand (AD) curve to the left.

Here's why:

1. The Aggregate Expenditure (AE) line represents the total spending in an economy at different levels of income. It includes consumption, investment, government spending, and net exports. When investment decreases, total spending in the economy decreases. This is represented by a downward shift in the AE line.

2. The Aggregate Demand (AD) curve represents the total quantity of all goods (and services) demanded by the economy at different price levels. An decrease in investment means less capital for businesses to use for expansion, leading to a decrease in production and, consequently, a decrease in the quantity of goods and services demanded at all price levels. This is represented by a shift of the AD curve to the left.

Question

A decrease in investment will shift the Aggregate Expenditure (AE) line downward and shift the Aggregate Demand (AD) curve to the left.

Here's why:

1. The Aggregate Expenditure (AE) line represents the total spending in an economy at different levels of income. It includes consumption, investment, government spending, and net exports. When investment decreases, total spending in the economy decreases. This is represented by a downward shift in the AE line.

2. The Aggregate Demand (AD) curve represents the total quantity of all goods (and services) demanded by the economy at different price levels. An decrease in investment means less capital for businesses to use for expansion, leading to a decrease in production and, consequently, a decrease in the quantity of goods and services demanded at all price levels. This is represented by a shift of the AD curve to the left.

Knowee AI · Accepted Answer

A decrease in investment will shift the Aggregate Expenditure (AE) line downward and shift the Aggregate Demand (AD) curve to the left.

Here's why:

1. The Aggregate Expenditure (AE) line represents the total spending in an economy at different levels of income. It includes consumption, investment, government spending, and net exports. When investment decreases, total spending in the economy decreases. This is represented by a downward shift in the AE line.

2. The Aggregate Demand (AD) curve represents the total quantity of all goods (and services) demanded by the economy at different price levels. An decrease in investment means less capital for businesses to use for expansion, leading to a decrease in production and, consequently, a decrease in the quantity of goods and services demanded at all price levels. This is represented by a shift of the AD curve to the left.

A(n) in investment will shift the AE line downward and shift the AD curve to the left.

Question

A(n) ___ in investment will shift the AE line downward and shift the AD curve to the left.

Solution

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