A fall in the price level that causes a change in the real value of wealth results in
A) a downward movement along the aggregate demand curve.
B) an upward movement along the aggregate demand curve.
C) a rightward shift of the demand curve.
D) a leftward shift of the demand curve.
E) no change in the quantity of aggregate demand.

Question

Quizplus · Accepted Answer

A fall in the price level that causes a change in the real value of wealth results in a movement along the aggregate demand curve, specifically a downward movement. This is because as the price level falls, the real value of wealth increases, leading to an increase in consumption and therefore a higher quantity of aggregate demand.

A Fall in the Price Level That Causes a Change