What is the effect of an increase in the price level?
A)The real value of dollar-denominated assets will rise.
B)The aggregate expenditure line will shift upward.
C)The equilibrium level of output demanded will fall.
D)There will be downward movement along a particular aggregate demand curve.
E)The aggregate demand curve will shift rightward.

Question

Quizplus · Accepted Answer

An increase in the price level will result in a decrease in the purchasing power of consumers and businesses, leading to a decrease in the quantity demanded of goods and services. This means that the equilibrium level of output demanded (represented by the intersection of the aggregate demand and aggregate supply curves) will fall, as there is less demand for goods and services at the higher price level.

What Is the Effect of an Increase in the Price