Suppose the price level decreases.How will the aggregate expenditure line and the aggregate demand curve be affected?
A) The aggregate expenditure line will shift downward, and the economy will move down along the aggregate demand curve.
B) The aggregate expenditure line will shift upward, and the economy will move up along the aggregate demand curve.
C) The aggregate demand curve will shift to the left, and the economy will move along the aggregate expenditure line.
D) The aggregate expenditure line will shift upward, and the economy will move down along the aggregate demand curve.

Question

Suppose the price level decreases.How will the aggregate expenditure line and the aggregate demand curve be affected?  
A) The aggregate expenditure line will shift downward, and the economy will move down along the aggregate demand curve. 
B) The aggregate expenditure line will shift upward, and the economy will move up along the aggregate demand curve. 
C) The aggregate demand curve will shift to the left, and the economy will move along the aggregate expenditure line. 
D) The aggregate expenditure line will shift upward, and the economy will move down along the aggregate demand curve.

Quizplus · Accepted Answer

When the price level decreases, consumers have more purchasing power, which increases consumption and shifts the aggregate expenditure line upward. Additionally, a lower price level increases the quantity of goods and services demanded, causing movement down along the aggregate demand curve.

Suppose the Price Level Decreases