Changes in the price level affect which of the following components of aggregate demand?
A)only consumption and investment
B)only consumption and net exports
C)only consumption
D)consumption, investment, and net exports

Question

Quizplus · Accepted Answer

Changes in the price level affect consumption (through the wealth effect and interest rate effect), investment (through the interest rate effect), and net exports (through the real exchange rate effect). Therefore, the correct answer is D, as all three components of aggregate demand are affected by changes in the price level.

Changes in the Price Level Affect Which of the Following