Why would one expect the AD curve to be vertical?
A)If the price level rises, relative prices haven't changed so people would not change their choices.
B)If the price level rises, changes in choices by suppliers are offset by changes in demanders.
C)People do not make choices based on relative prices, but instead based on absolute prices.
D)Substitution is not one of the reasons why the AD curve has its slope.

Question

Quizplus · Accepted Answer

The AD curve would be vertical if changes in the price level do not affect the overall demand for goods and services in the economy. This could be the case if people's choices are not influenced by changes in the price level because relative prices remain the same, and thus, their purchasing decisions remain unchanged.

Why Would One Expect the AD Curve to Be Vertical