Other things the same,a fall in the economy's overall level of prices tends to
A)raise both the quantity demanded and supplied of goods and services.
B)raise the quantity demanded of goods and services, but lower the quantity supplied.
C)lower the quantity demanded of goods and services, but raise the quantity supplied.
D)lower both the quantity demanded and the quantity supplied of goods and services.

Question

Quizplus · Accepted Answer

A fall in the overall level of prices increases the purchasing power of money, leading to an increase in the quantity demanded of goods and services. However, it may reduce the quantity supplied as producers may not find it profitable to produce at lower prices.

Other Things the Same,a Fall in the Economy's Overall Level