The aggregate expenditure curve and the aggregate demand curve are
A)not related at all.
B)the same curve, just with different names.
C)linked because if the price level rises, the aggregate expenditure curve shifts downward, and the aggregate demand curve shifts leftward.
D)linked because if the price level rises, the aggregate expenditure curve shifts downward, and there is a movement up along the aggregate demand curve.
E)linked because if the price level rises, the aggregate expenditure curve shifts downward, and there is a movement down along the aggregate demand curve.

Question

Quizplus · Accepted Answer

The aggregate expenditure curve and the aggregate demand curve are linked because if the price level rises, the aggregate expenditure curve shifts downward, and there is a movement up along the aggregate demand curve. This is because as the price level increases, consumption, investment, and net exports decrease, which leads to a decrease in aggregate expenditure. However, the quantity of goods demanded by households, firms, and the government remains the same, resulting in a movement up along the aggregate demand curve. Therefore, the two curves are related but represent different aspects of the macroeconomy.

The Aggregate Expenditure Curve and the Aggregate Demand Curve Are