A decrease in the price level
A)increases aggregate expenditure and produces a movement down along the aggregate demand curve.
B)increases aggregate expenditure and produces a rightward shift of the aggregate demand curve.
C)increases aggregate expenditure and produces a leftward shift of the aggregate demand curve.
D)has no effect on aggregate expenditure.
E)increases aggregate expenditure, but has no effect on the aggregate demand curve.

Question

Quizplus · Accepted Answer

A decrease in the price level would make goods and services cheaper, leading to an increase in aggregate expenditure because consumers would be able to purchase more for the same amount of money. This increase in aggregate expenditure would result in a movement down along the aggregate demand curve.

A Decrease in the Price Level