If the price level increases, the AE curve shifts
A)downward and there is a movement along the AD curve.
B)upward and the AD curve shifts rightward.
C)upward and there is a movement along the AD curve.
D)downward and the AD curve shifts rightward.
E)upward and the AD curve shifts leftward.

Question

Quizplus · Accepted Answer

When the price level increases, the aggregate expenditure (AE) curve shifts downward, leading to a movement along the aggregate demand (AD) curve, not a shift of the AD curve itself.

If the Price Level Increases, the AE Curve Shifts