Only a change in the price level can cause shifts in both the aggregate expenditure line and the aggregate demand curve.

Question

Quizplus · Accepted Answer

A change in price level causes a movement along the aggregate expenditure line (a change in quantity of real GDP demanded), but it does not cause a shift in the line or the aggregate demand curve. Shifts in the expenditure line and aggregate demand curve are caused by changes in factors such as government spending, investment, net exports, and consumer expectations.

Only a Change in the Price Level Can Cause Shifts