The theoretical proposition that the price level is just a numeraire and should not affect aggregate expenditures suggests the AD curve is:
A)downward sloping.
B)horizontal.
C)vertical.
D)upward sloping.

Question

Quizplus · Accepted Answer

The theoretical proposition that the price level is just a numeraire and should not affect aggregate expenditures suggests that the aggregate demand (AD) curve is vertical. This is because changes in the price level do not affect the quantity of goods and services demanded in the economy, assuming all else is equal.

The Theoretical Proposition That the Price Level Is Just a Numeraire