A change in which of the following parameters does NOT shift the AD curve $\tilde { Y } _ { t } = \bar { a } - \bar { b } \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$ ?
A) $\bar { b }$
B) $\pi _ { t }$
C) $\overline { \pi }$
D) $\bar { m }$
E) None of these answers are correct.

Question

Quizplus · Accepted Answer

The parameter $\pi _ { t }$ represents the current inflation rate, which affects the position along the AD curve but does not shift the curve itself. Changes in $\bar { b }$, $\overline { \pi }$, and $\bar { m }$ would shift the AD curve.

A Change in Which of the Following Parameters Does NOT Y~t=aˉ−bˉmˉ(πt−πˉ)\tilde { Y } _ { t } = \bar { a } - \bar { b } \bar { m } \left( \pi _ { t } - \bar { \pi } \right)Y~t​=aˉ−bˉmˉ(πt​−πˉ)

A Change in Which of the Following Parameters Does NOT $\tilde { Y } _ { t } = \bar { a } - \bar { b } \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$