Think in terms of the effect a fall in the price level has on aggregate demand (in the AD/AS model) as well as on the aggregate expenditure curve (in the AE model). In the AE model, the AE curve shifts

a. downward, and in the AD/AS model, it decreases the quantity of aggregate demand, which is shown as a movement down along the AD curve
b. downward, and in the AD/AS model, it increases the quantity of aggregate demand, which is shown as a movement up along the AD curve
c. downward, and in the AD/AS model, it increases the quantity of aggregate demand, which is shown as a movement along the AD curve
d. upward, and in the AD/AS model, it decreases the quantity of aggregate demand, which is shown as a movement down along the AD curve
e. upward, and in the AD/AS model, it increases the quantity of aggregate demand, which is shown as a movement down along the AD curve

E

Economics

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