A change in the price level
A) shifts the AE curve and the AD curve in the same direction.
B) shifts the AE curve and the AD curve in opposite directions.
C) shifts the AE curve and creates a movement along the AD curve.
D) creates a movement along the AE curve and shifts the AD curve.
E) creates a movement along both the AE curve and the AD curve.

Question

Quizplus · Accepted Answer

A change in the price level does not shift the Aggregate Expenditure (AE) curve; instead, it causes a movement along the Aggregate Demand (AD) curve. The AE curve represents planned spending at different levels of income or output, not at different price levels.

A Change in the Price Level