An increase in the price level will
A)shift the aggregate expenditure line upward
B)shift the aggregate expenditure line downward
C)result in a movement upward along the aggregate expenditure line
D)result in a movement downward along the aggregate expenditure line
E)change the slope of the aggregate expenditure line

Question

Quizplus · Accepted Answer

An increase in the price level reduces the real purchasing power of consumers, leading to a decrease in consumption and aggregate expenditure, thus shifting the aggregate expenditure line downward.

An Increase in the Price Level Will