A rise in the price level
A)decreases aggregate expenditure and produces a movement along the aggregate demand curve.
B)decreases aggregate expenditure and produces a rightward shift of the aggregate demand curve.
C)decreases 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 rise in the price level decreases aggregate expenditure because it reduces the purchasing power of money, leading to a movement along the aggregate demand curve, not a shift.

A Rise in the Price Level