We can use an aggregate expenditure line to show how an aggregate demand curve shifts by
A)shifting the 45-degree line
B)letting changes in autonomous spending shift the aggregate expenditure line
C)letting changes in the price level shift the aggregate expenditure line
D)letting changes in the level of income shift the aggregate expenditure line
E)letting changes in real GDP shift the aggregate expenditure line

Question

Quizplus · Accepted Answer

The aggregate expenditure line shows the total amount of spending that will occur at each level of real GDP. Autonomous spending, such as changes in investment or government spending, can shift this line. By plotting the aggregate expenditure line and the 45-degree line, we can determine where the equilibrium level of GDP and price level is. Changes in the price level or level of income will lead to movement along the aggregate demand curve, rather than a shift of the entire curve.

We Can Use an Aggregate Expenditure Line to Show How