What would be the effect of a decrease in the price level?
A) a downward shift in the aggregate expenditure line
B) a rise in the equilibrium level of output demanded
C) an upward movement along a particular aggregate demand curve
D) a leftward shift in the aggregate demand curve

Question

What would be the effect of a decrease in the price level?  
A) a downward shift in the aggregate expenditure line 
B) a rise in the equilibrium level of output demanded 
C) an upward movement along a particular aggregate demand curve 
D) a leftward shift in the aggregate demand curve

Quizplus · Accepted Answer

A decrease in the price level would increase the purchasing power of consumers, leading to an increase in the demand for goods and services. This would result in a rise in the equilibrium level of output demanded as shown by a movement upward along a particular aggregate demand curve. Therefore, option B is the correct choice. A decrease in the price level would not lead to a leftward shift in the aggregate demand curve or a downward shift in the aggregate expenditure line.

What Would Be the Effect of a Decrease in the Price