Refer to the diagram given below.There are two panels in the diagram. Assuming a constant price level, an increase in the aggregate expenditures schedule from AE₁ to AE₂ would: A)Refer to the above diagrams.Assuming a constant price level, an increase in aggregate expenditures from AE₁ to AE₂ would: B)move the economy from B to A along AD₁. C)shift the aggregate demand curve rightward from AD₁ to AD₂. D)shift the aggregate demand curve from AD₂ to AD₁.

Question

Quizplus · Accepted Answer

An increase in aggregate expenditures would shift the aggregate demand curve rightward, from AD₁ to AD₂. This is because at any given price level, there is now more demand for goods and services, leading to an increase in real GDP and a higher equilibrium price level. Moving from B to A would only occur if there was a movement along the same aggregate demand curve due to a change in the price level.

Refer to the Diagram Given Below