Which of the following sequences results from an increase in the price level?
A) the money demand curve shifts leftward,the interest rate decreases,investment spending and autonomous consumption increase,the aggregate expenditure line shifts downward and there is a leftward movement along the aggregate demand curve.
B) the money demand curve shifts rightward,the interest rate increases,investment spending and autonomous consumption decrease,the aggregate expenditure line shifts downward and there is a leftward movement along the aggregate demand curve.
C) the money demand curve shifts leftward,the interest rate increases,investment spending and autonomous consumption increase,the aggregate expenditure line shifts downward and there is a leftward movement along the aggregate demand curve.
D) the money demand curve shifts leftward,the interest rate drops,investment spending and autonomous consumption decrease,the aggregate expenditure line shifts downward and there is a leftward movement along the aggregate demand curve.
E) the money demand curve shifts rightward,the interest rate increases,investment spending and autonomous consumption increase,the aggregate expenditure line shifts downward and there is a rightward movement along the aggregate demand curve.

Question

Quizplus · Accepted Answer

An increase in the price level will lead to an increase in the demand for money, causing the money demand curve to shift rightward. This will result in an increase in the interest rate. As a result, investment spending and autonomous consumption will decrease. The aggregate expenditure line will shift downward due to the decrease in consumption and investment, and there will be a leftward movement along the aggregate demand curve.

Which of the Following Sequences Results from an Increase in the Price