An increase in shifts the AE curve and an increase in shifts the aggregate demand curve .

Question

Quizplus · Accepted Answer

An increase in the price level would shift the AE curve downward because higher prices reduce consumer purchasing power and therefore reduce overall spending. An increase in autonomous expenditure (such as government spending or investment) would shift the aggregate demand curve rightward because it would increase overall spending in the economy.

An Increase in Shifts the AE Curve and an Increase