A fall in the price level shifts the AE curve_________ and _________equilibrium expenditure.
A) downward; increases
B) upward; decreases
C) downward; decreases
D) upward; increases

Question

Quizplus · Accepted Answer

A fall in the price level increases real wealth, leading to higher consumption and investment, which shifts the Aggregate Expenditure (AE) curve upward and increases equilibrium expenditure.

A Fall in the Price Level Shifts the AE Curve_________