Suppose the price level increases.How will the aggregate demand curve be affected?
A) The aggregate demand curve will shift to the right.
B) The aggregate demand curve will shift to the left.
C) The level of aggregate quantity demanded will increase.
D) The level of aggregate quantity demanded will decrease.

Question

Suppose the price level increases.How will the aggregate demand curve be affected?  
A) The aggregate demand curve will shift to the right. 
B) The aggregate demand curve will shift to the left. 
C) The level of aggregate quantity demanded will increase. 
D) The level of aggregate quantity demanded will decrease.

Quizplus · Accepted Answer

An increase in the price level will lead to a decrease in the purchasing power of consumers, causing them to reduce their consumption expenditure. This, in turn, leads to a decrease in the quantity demanded at each price level, causing a leftward shift of the aggregate demand curve.

Suppose the Price Level Increases