The aggregate demand curve illustrates that, as the price level rises,
A) the quantity of real GDP demanded decreases.
B) the AD curve shifts rightward.
C) the AD curve shifts leftward.
D) the quantity of real GDP demanded increases.

Question

Quizplus · Accepted Answer

The aggregate demand curve shows the relationship between the price level and the quantity of real GDP demanded by households, businesses, and the government. As the price level rises (for example, due to inflation), the purchasing power of consumers decreases, leading to a decrease in the quantity of real GDP demanded. Therefore, the correct choice is A, which states that the quantity of real GDP demanded decreases as the price level rises.

The Aggregate Demand Curve Illustrates That, as the Price Level