A change in the price level ________ the AE curve and ________ the AD curve.
A) shifts; shifts
B) shifts; results in a movement along
C) results in a movement along; shifts
D) results in a movement along; results in a movement along
E) has no effect on; results in a movement along

Question

Quizplus · Accepted Answer

A change in the price level results in a movement along the AE curve (as the level of planned expenditures changes due to changes in real wealth or interest rates) and a movement along the AD curve (as the level of real GDP demanded changes). A shift in either curve would require a change in another variable such as government spending, taxes or expectations.

A Change in the Price Level ________ the AE Curve