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

Question

Quizplus · Accepted Answer

A change in the price level causes a movement along the Aggregate Demand (AD) curve, as it reflects changes in the quantity of goods and services demanded at different price levels. It also shifts the Aggregate Expenditure (AE) curve, as changes in the price level affect consumption, investment, and net exports, altering the overall expenditure at each income level.

A Change in the Price Level