A fall in the price level
A) shifts the aggregate expenditure curve upward and increases the quantity of real GDP demanded.
B) shifts the aggregate demand curve rightward and increases equilibrium GDP.
C) decreases aggregate planned expenditures and shifts the aggregate demand curve leftward.
D) shifts both the aggregate expenditures curve and aggregate demand curve upward.

Question

Quizplus · Accepted Answer

A fall in the price level increases the real value of money, leading to higher consumption and investment, which shifts the aggregate expenditure curve upward and increases the quantity of real GDP demanded.

A Fall in the Price Level