Option 1 -> When autonomous investment increases, the investment component of aggregate demand rises, causing the entire AD curve to shift upward.
Option 2 -> Due to the multiplier effect, output increases by MORE than the change in investment (ΔY = k × ΔI, where k > 1).
Option 3 -> While technically true by definition, this is merely an accounting identity rather than an economic consequence.
Option 4 -> The consumption function itself doesn't shift; rather, higher income leads to movement along the consumption curve.
Hence, The aggregate demand curve shifts upwards -> In a two-sector model, AD = C + I. When autonomous investment (I) increases, aggregate demand increases at every income level, causing a parallel upward shift of the AD curve. This leads to a new equilibrium with higher output through the multiplier process (ΔY = k × ΔI, where k = 1/(1-MPC)). The consumption curve itself remains unchanged, but consumption increases due to the induced effect of higher income -> correct