Any change in the price level will result in a
A)shift in the AE and AD curves in opposite directions.
B)shift in the AE and AD curves in the same direction.
C)shift in the AE curve and a movement along the AD curve.
D)movement along the AE curve and a shift of the AD curve.

Question

Quizplus · Accepted Answer

A change in the price level results in a movement along the Aggregate Demand (AD) curve, as it reflects the relationship between the price level and the quantity of output demanded. However, it causes a shift in the Aggregate Expenditure (AE) curve because the AE curve represents planned spending at different levels of income, which can be affected by changes in the price level.

Any Change in the Price Level Will Result in a