A change in income in the IS-LM model resulting from a change in the price level is represented by a ______ aggregate demand curve, while a change in income in the IS-LM model for a given price level is represented by a ______ aggregate demand curve.
A) movement along the; shift in the
B) shift in the; movement along the
C) vertical; horizontal
D) horizontal; vertical

Question

Quizplus · Accepted Answer

A change in income resulting from a change in the price level is represented by a movement along the aggregate demand curve, as it reflects a change in the quantity demanded at different price levels. Conversely, a change in income in the IS-LM model for a given price level, which could result from fiscal or monetary policy, is represented by a shift in the aggregate demand curve, indicating a change in demand at all price levels.

A Change in Income in the IS-LM Model Resulting from a Change