An Increase in the Price Level Shifts the Aggregate Expenditure

question 187

Essay

An increase in the price level shifts the aggregate expenditure curve downward and results in a movement along the aggregate demand curve. Why does an increase in the price level result in a shift in the aggregate expenditure curve rather than a movement along it?

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Definitions:

Operative

Relating to or involved in the functioning of operations or activities within an organization or system.

Will

The mental faculty by which one deliberately chooses or decides upon a course of action; determination or drive.

Power

The ability or capacity to influence or control the behavior of people or the course of events.

Social Power

The ability to influence or control the behavior of others within a social framework, often derived from one's position, resources, or relationships.