Suppose the price level rises.How would this affect the aggregate expenditure line and the aggregate demand curve?
A) The aggregate expenditure line would shift upward, and the economy would move downward along the aggregate demand curve.
B) The aggregate expenditure line would shift downward, and the economy would move upward along the aggregate demand curve.
C) The aggregate demand curve would shift to the right, and the economy would move along the aggregate expenditure line.
D) The aggregate demand curve would shift to the left, and the economy would move along the aggregate expenditure line.

Question

Suppose the price level rises.How would this affect the aggregate expenditure line and the aggregate demand curve?  
A) The aggregate expenditure line would shift upward, and the economy would move downward along the aggregate demand curve. 
B) The aggregate expenditure line would shift downward, and the economy would move upward along the aggregate demand curve. 
C) The aggregate demand curve would shift to the right, and the economy would move along the aggregate expenditure line. 
D) The aggregate demand curve would shift to the left, and the economy would move along the aggregate expenditure line.

Quizplus · Accepted Answer

When the price level rises, the aggregate expenditure line shifts downward because higher prices reduce consumption and investment. Consequently, the economy moves upward along the aggregate demand curve as the quantity of goods and services demanded decreases.

Suppose the Price Level Rises