A decrease in the price level will
A)shift the aggregate demand curve to the right
B)shift the aggregate demand curve to the left
C)result in a movement upward along the aggregate demand curve
D)result in a movement downward along the aggregate demand curve
E)change the slope of the aggregate demand curve

Question

Quizplus · Accepted Answer

A decrease in the price level will result in a movement downward along the aggregate demand curve. This is because a decrease in the price level will increase the purchasing power of consumers, leading to an increase in consumption and ultimately an increase in aggregate demand. Conversely, an increase in the price level will lead to a movement upward along the aggregate demand curve, as consumers will have less purchasing power and demand less goods and services.

A Decrease in the Price Level Will