By looking at aggregate demand through its component parts,we can conclude that a ________ price level ________ the real quantity of money,________ higher spending.
A)lower; expands; encouraging
B)higher; contracts; encouraging
C)lower; contracts; discouraging
D)higher; expands; encouraging

Question

Quizplus · Accepted Answer

When the price level is lower, the real quantity of money expands, making it easier for consumers to purchase goods and services, which encourages higher spending. On the other hand, when the price level is higher, the real quantity of money contracts, making it more difficult for consumers to purchase goods and services, which discourages spending.

By Looking at Aggregate Demand Through Its Component Parts,we Can