When a nonprice change affects any of the four components of GDP:
A)the aggregate demand curve will shift left or right.
B)the economy will move up or down along the aggregate demand curve.
C)the aggregate demand curve will remain unaffected.
D)None of these is true.

Question

Quizplus · Accepted Answer

Any nonprice change that affects the components of GDP will shift the aggregate demand (AD) curve left or right. This is because the components of GDP are part of the AD equation (C+I+G+NX) and if any of them change, then the overall level of demand in the economy will change, causing the AD curve to shift.

When a Nonprice Change Affects Any of the Four Components