An increase in the price level will
A)shift the aggregate demand curve to the right
B)shift the aggregate demand curve to the left
C)increase the level of aggregate quantity demanded
D)decrease the level of aggregate quantity demanded
E)have no effect at all on aggregate demand

Question

Quizplus · Accepted Answer

When the price level increases, the purchasing power of consumers decreases, leading them to reduce their level of consumption. This decrease in consumption leads to a decrease in the level of aggregate quantity demanded, shifting the aggregate demand curve to the left. Therefore, the best choice is D, "decrease the level of aggregate quantity demanded."

An Increase in the Price Level Will