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Unformatted text preview: A5-6 Statement A5-6 is true. This is because a rise in price levels causes the aggregate expenditure curve to shift downward and hence this leads to an upward and left movement along the aggregate demand curve. As seen in the diagram below as AE increases to AE 1 the point of equilibrium shifts leftward on the 45 degree line. This shift results in leftward shift along the aggregate demand curve as seen on the diagram as E moves to E . **** The diagram is on page 551 of the text.its both graphs one under the other....
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- Spring '10