A movement along the AD curve is due to:Multiple choice question.a change in aggregate supply.changes in the determinants of aggregate demand.a change in determinants of demand.changes in the price level.
Question
A movement along the AD curve is due to:Multiple choice question.a change in aggregate supply.changes in the determinants of aggregate demand.a change in determinants of demand.changes in the price level.
Solution
A movement along the Aggregate Demand (AD) curve is due to changes in the price level.
Here's why:
The AD curve shows the quantity of all goods and services (real GDP) that buyers are willing and able to purchase at different price levels. The curve is downward sloping, indicating that as the price level decreases (deflation), real GDP (output) increases. Conversely, as the price level increases (inflation), real GDP decreases.
So, when there's a change in the price level, we move along the AD curve. This is because the price level is on the y-axis of the AD/AS model, and any change in a variable on the axis causes a movement along the curve, not a shift of the curve.
Therefore, the correct answer is: changes in the price level.
Similar Questions
If consumption, gross investment, or net exports are increasing because of a lower price level, there has been a:Multiple choice question.movement along the AS curve.shift of the AD curve.movement along the AD curve.shift of the AS curve.
In the AD-AS model, which of the following events would most likely shift the Aggregate Demand (AD) curve to the right?A.An increase in consumer confidence. B.A. An increase in taxes. C. B. A decrease in government spending.D.D. An increase in the price level.
In the AD-AS model, the leftward shift in the aggregate supply curve may be due to ( ).A.Otherwise unchanged and monetary wage increase.B.All other things being equal, the price of raw materials has risen.C.Other things being equal, labour productivity declines.D.All of the above are possible.
A movement along the supply curve is the result of a change in _______ , while a shift in the supply curve is the result of a change in ________.Multiple choice question.price; non-price determinantsnon-price determinants; pricedemand; priceprice; demand.
The effect on the aggregate demand of a decrease in the price level is represented by a/an _______________ the AD curve. upward movement along downward movement along upward shift of leftward shift of None of the above are correct
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