Which of the following is an effect of an increase in the price level in an economy?
A)The real value of dollar-denominated assets will increase.
B)The aggregate expenditure line will shift upward.
C)The equilibrium real gross domestic product will decrease.
D)There will be downward movement along a particular aggregate demand curve.
E)The aggregate demand curve will shift rightward.

Question

Quizplus · Accepted Answer

An increase in the price level in an economy will lead to a decrease in the purchasing power of consumers and a decrease in consumer demand. This will result in a decrease in the equilibrium Real Gross Domestic Product (GDP) as the quantity of goods and services demanded by consumers will decrease.

Which of the Following Is an Effect of an Increase