If the U.S. aggregate price level rises
A) net exports will also rise.
B) interest rates will decline.
C) the aggregate demand curve will shift to the left.
D) the purchasing power of wealth will decrease.

Question

Quizplus · Accepted Answer

When the U.S. aggregate price level rises, the purchasing power of wealth will decrease, as the same amount of money will be able to buy less goods and services. This is because the general price level is higher. The other options are not true, as an increase in aggregate price level does not necessarily lead to an increase in net exports or a decline in interest rates, and it actually causes a shift in the aggregate demand curve to the right, not to the left.

If the U.S. Aggregate Price Level Rises