What is the key difference between the aggregate expenditure model and the aggregate demand/aggregate supply model?
A) the aggregate expenditure model examines monetary policy whereas the aggregate demand/aggregate supply model does not
B) monetary and real factors interact in the aggregate demand/aggregate supply model
C) the aggregate expenditure model assumes that the price level is fixed
D) the aggregate demand/aggregate supply model assumes that the price level is fixed
E) the aggregate expenditure model assumes that real GDP is fixed

Question

Quizplus · Accepted Answer

The aggregate expenditure model assumes that the price level is fixed, focusing on the relationship between total spending and real GDP, while the aggregate demand/aggregate supply model considers changes in the price level.

What Is the Key Difference Between the Aggregate Expenditure Model