An increase in the price level in the United States will shift the aggregate expenditure line upward.

Question

Quizplus · Accepted Answer

An increase in the price level in the United States will not shift the aggregate expenditure line upward, but rather will cause a movement upward along the same aggregate expenditure line due to a decrease in real purchasing power. A shift in the aggregate expenditure line can only be caused by changes in factors such as government spending, investment, net exports, or consumption function.

An Increase in the Price Level in the United States