Does a change in the price levels cause a movement along the aggregate expenditure line or a...
Question:
Does a change in the price levels cause a movement along the aggregate expenditure line or a shift of the aggregate expenditure line?
A change in the price level:
A. does not affect the aggregate expenditure line.
B. causes a shift of the aggregate expenditure line.
C. causes both a movement along and a shift of the aggregate expenditure line.
D. causes a movement along the aggregate expenditure line.
Does a change in the price level cause a movement along the aggregate demand curve or a shift of the aggregate demand curve?
A change in the price level:
A. causes a shift of the aggregate demand curve.
B. causes both a movement along and the shift of the aggregate demand curve.
C. causes a movement along the aggregate demand curve.
D. does not affect the aggregate demand curve.
Expenditure and Demand Curves:
The aggregate expenditure curve, which is equivalent to the aggregate supply curve represents the relationship between the quantity produced and the price level. The aggregate demand curves show the relationship between total quantities of goods and services demanded at the given level of price.
Answer and Explanation: 1
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View this answerBoth expenditure and demand curves show the relationship between quantity and the market price. Thus, when the price changes we move along with these...
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Aggregate Supply and Aggregate Demand (AS-AD) Model
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Chapter 7 / Lesson 3
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Understand the aggregate demand-aggregate supply model and its features. Read more about the curve shifts of this and learn the AD-AS model through an example.
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