That means, because of an improvement in technology, demand for labor increases, which increases not only real wages, but also the equilibrium level of employment. It also causes the whole production function to shift out, because at any level of work hours, more output can be produced than was possible to produce before. All of the words I just said in this paragraph can then be translated into the language of diagrams. Instead of looking at the diagrams and retranslating into words, you might be more successful by telling the story like this in words first, and then, upon understanding that story, drawing the diagrams. I would assume this is exactly the sequence of the mental-linguistic approach that goes on in Dr. Huenneke's head, since he had to study this stuff for many years.
Households are more optimistic about the economy.
This increases autonomous consumption and through that increase, there is an increase in total autonomous expenditures. This increase in aggregate expenditures at every level of income causes an increase in the equilibrium level of income. The 45 degree line that represents all potential levels of Y did not change. Keep everything I've just said in mind as you get ready for the exam on Wednesday. I know from years of watching Dr. Huenneke at his work, that he doesn't like to ask questions about these models so you can show you have some kind of handle on trivial information, or to show that you have packed your short term memory full of facts and concepts you don't really understand.