As the price level increases,what is the effect on the quantity of real GDP demanded in the economy?
A)It increases.
B)It first increases and then decreases.
C)It decreases.
D)It remains the same.

Question

Quizplus · Accepted Answer

As the price level increases, it reduces the purchasing power of consumers, which implies that they cannot buy the same quantity of goods and services as before. This decrease in purchasing power leads to a decrease in the quantity of real GDP demanded in the economy. Therefore, as the price level increases, the quantity of real GDP demanded decreases.

As the Price Level Increases,what Is the Effect on the Quantity