A reason why an increase in the price level decreases the quantity of real GDP demanded is that
A)the buying power of money increases.
B)the real interest rate falls.
C)the price of domestic goods and services increases relative to foreign goods and services.
D)the inflation rate decreases.
E)potential GDP decreases.

Question

Quizplus · Accepted Answer

When the price level increases, domestic goods and services become more expensive relative to foreign goods and services, leading to a decrease in the quantity of real GDP demanded.

A Reason Why an Increase in the Price Level Decreases