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

Question

Quizplus · Accepted Answer

According to the inverse relationship between price level and quantity demanded in the aggregate demand curve, as the price level rises, the quantity of real GDP demanded decreases. This is because at higher price levels, consumers have less purchasing power, leading to a decrease in consumption expenditure, and firms may reduce production due to lower demand. As a result, the aggregate demand curve slopes downward from left to right.

The Aggregate Demand Curve Illustrates That, as the Price Level