A decrease in the price level in Canada will have what effect on the aggregate expenditure line?
A)Aggregate expenditure will shift downward.
B)Aggregate expenditure will become steeper.
C)Aggregate expenditure will shift upward.
D)Aggregate expenditure will shift upward and become less steep.
E)Aggregate expenditure will not be affected by an increase in the price level in the United States.

Question

Quizplus · Accepted Answer

A decrease in the price level in Canada increases the real wealth of consumers, leading to an increase in consumption. This increase in consumption causes the aggregate expenditure line to shift upward, as consumers are willing to spend more at each level of income.

A Decrease in the Price Level in Canada Will Have