When looking at a graph of aggregate demand, what does a movement along the aggregate demand curve represent?

• A. A change in aggregate supply
• B. A change in government spending
• C. A change in the overall price level
• D. A change in consumer preferences

Answer: (C)

Verified step by step guidance

1. Understand that the aggregate demand (AD) curve shows the relationship between the overall price level and the total quantity of goods and services demanded in the economy.
2. Recognize that a movement along the AD curve occurs when there is a change in the overall price level, holding other factors constant.
3. Note that changes in factors like government spending or consumer preferences shift the entire AD curve rather than causing movement along it.
4. Recall that a change in aggregate supply affects the aggregate supply curve, not the movement along the AD curve.
5. Therefore, a movement along the aggregate demand curve specifically represents a change in the overall price level, which affects the quantity of goods and services demanded.