E In general what effect does the slope of the AS curve have

E. In general, what effect does the slope of the AS curve have on the size of the change in real output due to an increase in autonomous expenditure in the AE model?

Solution

AE model is aggregate expenditure model, It is addition of all planned expenditure and also autonomous expenditure

AS curve is aggregate supply curve,

Due to increase in autonomous expenditure AS curve will go up and also the real output will increase

This was practiced in stimulus packages all over the world after 2008 recession.