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How Changes in the Aggregate Price Level Affect Income–Expenditure Equilibrium

How Changes in the Aggregate Price Level Affect Income–Expenditure Equilibrium Income–expenditure equilibrium occurs at the point where the curve AEPlanned, which shows real aggregate planned spending, crosses the 45-degree line. A fall in the aggregate price level causes the AEPlanned curve to shift from to , leading to a rise in income–expenditure equilibrium GDP from Y1 to Y2.