How would an economist use an aggregate expenditure line to show how an aggregate demand curve shifts?
A) by letting changes in autonomous spending shift the aggregate expenditure line
B) by letting changes in the price level shift the aggregate expenditure line
C) by letting changes in the level of income shift the aggregate expenditure line
D) by letting changes in real GDP shift the aggregate expenditure line

Question

How would an economist use an aggregate expenditure line to show how an aggregate demand curve shifts?  
A) by letting changes in autonomous spending shift the aggregate expenditure line 
B) by letting changes in the price level shift the aggregate expenditure line 
C) by letting changes in the level of income shift the aggregate expenditure line 
D) by letting changes in real GDP shift the aggregate expenditure line

Quizplus · Accepted Answer

An economist would use an aggregate expenditure line to show how an aggregate demand curve shifts by letting changes in autonomous spending shift the aggregate expenditure line. Autonomous spending includes government spending, investment, and net exports, which are not influenced by changes in income or the price level. Therefore, any changes in these components will cause the aggregate expenditure line to shift, leading to a shift in the aggregate demand curve. Changes in the price level or the level of income would lead to movements along the aggregate expenditure line, rather than shifts in the curve.

How Would an Economist Use an Aggregate Expenditure Line to Show