To counter the recessionary pressure resulting from Covid-19 pandemic, on March 25, 2020, Bangladesh government announced a stimulus package of Tk. 5,000 crore for export-oriented industries which could only be disbursed in the form of salaries and wages for employees and workers of the industries. Suppose that the marginal propensity to consume (MPC) of the people of Bangladesh is 80%, proportional income tax rate is 10% and marginal propensity to import is 10%.

Now suppose that price level is not constant, i.e., Short Run Aggregate Supply ( SRAS) curve is upward sloping. Without giving a precise numeric answer, what is the effect of a variable price level on the Aggregate Expenditure (AE) curve? What is the effect on the AD curve?