A decrease in the price level
A)increases aggregate expenditure and produces a movement along the aggregate demand curve.
B)increases aggregate expenditure and produces a rightward shift of the aggregate demand curve.
C)increases aggregate expenditure and produces a leftward shift of the aggregate demand curve.
D)has no effect on aggregate expenditure.
E)increases aggregate expenditure, but has no effect on the aggregate demand curve.

Question

Quizplus · Accepted Answer

A decrease in the price level results in an increase in the purchasing power of consumers, which increases their aggregate expenditure. This increase in aggregate expenditure produces a movement along the aggregate demand curve.

A Decrease in the Price Level