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 rise.
D)There will be upward 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 causes a decrease in the real value of money, leading to a decrease in aggregate demand. This results in an upward movement along a particular aggregate demand curve, as the quantity demanded of goods and services decreases in response to the higher prices.

(Note: choices A, B, C, and E are incorrect as they do not accurately describe the effect of an increase in the price level.)

What Is the Effect of an Increase in the Price