How will an increase in the price level affect the aggregate expenditure line?
A) It will shift the aggregate expenditure line upward.
B) It will shift the aggregate expenditure line downward.
C) It will cause a movement up along the aggregate expenditure line.
D) It will cause a movement down along the aggregate expenditure line.

Question

How will an increase in the price level affect the aggregate expenditure line?  
A) It will shift the aggregate expenditure line upward. 
B) It will shift the aggregate expenditure line downward. 
C) It will cause a movement up along the aggregate expenditure line. 
D) It will cause a movement down along the aggregate expenditure line.

Quizplus · Accepted Answer

An increase in the price level reduces the real purchasing power of consumers, leading to a decrease in consumption and aggregate expenditure, thus shifting the aggregate expenditure line downward.

How Will an Increase in the Price Level Affect the Aggregate