An increase in the price level _{--------------------}the aggregate quantity supplied and _{--------------------} the aggregate quantity demanded. A)decreases; decreases B)increases; decreases C)decreases; increases D)does not change; decreases E)increases; increases

Question

Quizplus · Accepted Answer

An increase in the price level typically increases the aggregate quantity supplied because producers are willing to supply more at higher prices. However, it decreases the aggregate quantity demanded because consumers are less willing to buy goods and services at higher prices.

An Increase in the Price Level --------------------the Aggregate Quantity Supplied

An Increase in the Price Level _{--------------------}the Aggregate Quantity Supplied