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Which is the correct sequence of determination of income in an economy as a result of change in autonomous expenditure?

(A) The output and aggregate demand increase.

(B) The increment in the autonomous investment in the economy is Rs. 10 Cr.

(C) The aggregate demand curve shifts in parallel upwards.

(D) The investment multiplier works in forward direction.

Choose the correct answer from the options given below:

Solution

✅ Correct Option: 3

The process begins with an increase in autonomous investment of Rs. 10 Cr (B). This sets the investment multiplier working in the forward direction (D), shifting the aggregate demand curve parallelly upwards (C). Finally, equilibrium output and aggregate demand increase (A). Sequence: B, D, C, A.

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