A rise in the price level
A) decreases the quantity of real GDP demanded.
B) decreases aggregate demand.
C) has no effect on aggregate demand or on the quantity of real GDP demanded.
D) increases aggregate demand.
E) increases the quantity of real GDP demanded.

Question

Quizplus · Accepted Answer

A rise in the price level decreases the quantity of real GDP demanded because it reduces the purchasing power of consumers' income, leading to a decrease in consumption.

A Rise in the Price Level