Other things being equal,as the price level falls exogenously,the aggregate expenditure (AE)function shifts
A)down and the economy will move upward along the AD curve.
B)down and the economy will move downward along the AD curve.
C)upward and the economy moves upward along the AD curve.
D)upward and the economy moves downward along the AD curve.
E)to the left,as does the AD curve.

Question

Quizplus · Accepted Answer

As the price level falls, the real value of money increases, leading to higher consumption and investment, which shifts the AE function upward. Consequently, the economy moves downward along the AD curve, reflecting an increase in real GDP demanded at lower price levels.

Other Things Being Equal,as the Price Level Falls Exogenously,the Aggregate