0
$\begingroup$

Today in class, we learned about aggregate demand. However, while I understand the shifters, I am an unable to understand what actual movement along the curve represents. Why doesn't a change in price level merely shift the graph to the left or right? What even is the difference between movement along the curve vs. shifting the curve?

$\endgroup$
4
$\begingroup$

This is very fundamental and I'd recommend that if you're still not crystal clear about this you should talk to your TA or course instructor, since you'll have a hard time going through the course without fully grasping this.

The demand graph represents the relationship between price and quantity, holding everything else constant. So it's saying that as price goes up, everything else being equal, quantity demanded will go down.

When something else is changing (income, preferences, etc.), then there is usually a shift in the demand curve.

Bottom line: if price is the only thing that's changing (everything else is constant), it's a shift along the curve. If something else is changing, then the curve would shift.

$\endgroup$

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.