Other things constant, the economy's aggregate demand curve shows that
A) as the price level falls, real GDP decreases.
B) any change in the price level shifts the aggregate demand curve.
C) the quantity of real GDP demanded decreases when the price level rises.
D) the quantity of real GDP demanded and the price level are not related.

Question

Quizplus · Accepted Answer

The aggregate demand curve illustrates that as the price level rises, the quantity of real GDP demanded decreases, due to the wealth effect, interest rate effect, and international trade effect. This inverse relationship between price level and real GDP demanded is a fundamental concept in macroeconomics.

Other Things Constant, the Economy's Aggregate Demand Curve Shows That