Suppose the price level increases.How will the aggregate expenditure line be affected?
A) The aggregate expenditure line will shift upward.
B) The aggregate expenditure line will shift downward.
C) The aggregate expenditure line will remain the same.
D) The aggregate expenditure curve will become negative

Question

Suppose the price level increases.How will the aggregate expenditure line be affected?  
A) The aggregate expenditure line will shift upward. 
B) The aggregate expenditure line will shift downward. 
C) The aggregate expenditure line will remain the same. 
D) The aggregate expenditure curve will become negative

Quizplus · Accepted Answer

An increase in the price level will lead to a decrease in aggregate demand since the purchasing power of consumers decreases. This will cause the aggregate expenditure line to shift downward.

Suppose the Price Level Increases