If consumption increases,
A) the SRAS curve will shift rightward,which will push the price level up.
B) the SRAS curve will shift leftward,which will push the price level up.
C) the AD curve will shift leftward,which will push the price level down.
D) the AD curve will shift rightward,which will push the price level up.

Question

Quizplus · Accepted Answer

If consumption increases, it is a component of aggregate demand (AD). An increase in AD will shift the AD curve rightward. This will cause an increase in both output and the price level, as the economy moves closer to full employment. Therefore, choice D is the correct answer. Choice A is incorrect because an increase in SRAS will reduce the price level, not increase it. Choice B is incorrect because a leftward shift in the SRAS curve would decrease output and increase the price level, which is the opposite of what happens when consumption increases. Choice C is incorrect because a leftward shift in the AD curve would decrease output and increase the price level, which is the opposite of what happens when consumption increases.

If Consumption Increases