A rise in the price level will:
A)cause an upward movement along the aggregate demand curve.
B)cause a downward movement along the aggregate demand curve.
C)cause a leftward shift of the aggregate demand curve.
D)cause a rightward shift of the aggregate demand curve.
E)have no impact on the aggregate demand curve.

Question

Quizplus · Accepted Answer

A rise in the price level will cause an upward movement along the aggregate demand curve because as the price level increases, the quantity of goods and services demanded will decrease due to the decrease in real purchasing power. This results in a movement upward along the aggregate demand curve, which shows the relationship between the price level and the quantity of goods and services demanded.

A Rise in the Price Level Will