If aggregate demand shifts right, then eventually price level expectations rise. This increase in price level expectations causes the aggregate demand curve to shift to the left back to its original position.

Question

Quizplus · Accepted Answer

While an increase in price level expectations can lead to higher costs for firms and potentially decrease aggregate supply, it does not directly cause the aggregate demand curve to shift left. Aggregate demand shifts due to changes in factors like consumer spending, investment, government spending, and net exports, not directly due to changes in price level expectations.

If Aggregate Demand Shifts Right, Then Eventually Price Level Expectations