The AE curve illustrates the relationship between
A) aggregate planned expenditure and real GDP.
B) real GDP and actual expenditure.
C) real GDP and the interest rate.
D) the interest rate and aggregate planned expenditure.
E) the quantity of real GDP demanded and the price level.

Question

Quizplus · Accepted Answer

The AE curve, or Aggregate Expenditure curve, shows the relationship between aggregate planned expenditure (which includes consumption, investment, government spending, and net exports) and real GDP. As aggregate planned expenditure increases, so does real GDP, leading to a positive slope of the AE curve. Thus, choice A is the correct answer.

The AE Curve Illustrates the Relationship Between