A rise in the price level ________ the buying power of money and ________ the quantity of real GDP demanded.
A)does not affect;increases
B)lowers;increases
C)raises;decreases
D)lowers;decreases
E)does not affect;does not change

Question

Quizplus · Accepted Answer

An increase in the price level lowers the buying power of money, as each unit of currency can purchase less goods and services. This, in turn, decreases the quantity of real GDP demanded, as consumers and businesses may reduce their spending due to the higher prices.

A Rise in the Price Level ________ the Buying Power