We Can Use an Aggregate Expenditure Line to Show How

question 25

Multiple Choice

We can use an aggregate expenditure line to show how an aggregate demand curve shifts by

• A)shifting the 45-degree line
• B)letting changes in autonomous spending shift the aggregate expenditure line
• C)letting changes in the price level shift the aggregate expenditure line
• D)letting changes in the level of income shift the aggregate expenditure line
• E)letting changes in real GDP shift the aggregate expenditure line

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Definitions:

Surplus

A situation where there is excess of supply over demand in the market, leading to downward pressure on prices.

Decrease in Demand

A situation where consumers are willing and able to purchase less of a good or service at any given price, often reflected in a leftward shift of the demand curve.

Decrease in Price

A reduction in the cost of a good or service, often resulting in increased demand or consumption.

Decrease in Supply

A reduction in the total amount of a given good or service that is available to consumers, often leading to higher prices.