An increase in the price level in the aggregate expenditures model would:
A)decrease aggregate expenditures and real GDP.
B)increase aggregate expenditures and real GDP.
C)increase aggregate expenditures and decrease real GDP.
D)decrease aggregate expenditures and increase real GDP.

Question

Quizplus · Accepted Answer

According to the aggregate expenditures model, an increase in the price level would lead to a decrease in consumption, investment, and net exports, which would decrease aggregate expenditures and real GDP.

An Increase in the Price Level in the Aggregate Expenditures