When the aggregate price level falls,the purchasing power of assets rises,which leads to:
A) an increase in the quantity of aggregate output demanded.
B) a decrease in the quantity of aggregate output demanded.
C) a shift in the AD curve to the right.
D) a shift in the AD curve to the left.

Question

Quizplus · Accepted Answer

When the aggregate price level falls, the purchasing power of assets rises. As a result, individuals will have more disposable income available, which they will use to purchase more goods and services. This, in turn, will increase the demand for aggregate output, causing an increase in the quantity of aggregate output demanded.

When the Aggregate Price Level Falls,the Purchasing Power of Assets