Question

An increase in investment spending will ________ the aggregate demand (AD) curve.

O cause a shift to the right of

O cause a shift to the left of

O cause a movement upward along

O cause a movement downward along

O not cause any change

Answer 1

An increase in investment spending causes a movement upward along the aggregate demand (AD) curve.

Step-by-step explanation:

When investment spending increases, it leads to an increase in aggregate demand, which is represented by a movement upward along the AD curve. This is because investment spending is one of the components of aggregate demand, along with consumption, government spending, and net exports.

For example, when businesses invest in new equipment or expand their operations, it stimulates economic activity and leads to an increase in the demand for goods and services. As a result, the AD curve shifts upward, indicating an increase in aggregate demand.