Consider a simple macro model with demand- determined output. An exogenous change in the price level shifts the AE curve because the change affects desired and desired .
A)consumption; net exports
B)government purchases; net exports
C)investment; consumption
D)consumption; imports
E)consumption; investment

Question

Quizplus · Accepted Answer

An exogenous change in the price level affects consumption and net exports because it influences the real wealth of consumers and the relative price of domestic versus foreign goods.

Consider a Simple Macro Model with Demand- Determined Output