An increase in aggregate expenditures resulting from some factor other than a change in the price level is equivalent to
A) a rightward shift of the aggregate demand curve in the AD-AS model.
B) a leftward shift of the aggregate demand curve in the AD-AS model.
C) a movement downward along a ﬁxed aggregate demand curve in the AD-AS model.
D) a decrease in aggregate supply in the AD-AS model.

Question

Quizplus · Accepted Answer

An increase in aggregate expenditures would mean that there is an increase in demand for goods and services, which would result in a rightward shift of the aggregate demand curve in the AD-AS model. This would lead to an increase in both output and the price level, as represented by a movement along the short-run aggregate supply curve.

An Increase in Aggregate Expenditures Resulting from Some Factor Other