The aggregate demand curve shows that, if other factors are held constant, a
A) higher price level results in a decrease in the quantity of real GDP demanded.
B) higher price level results in an increase in the quantity of real GDP demanded.
C) higher price level results in a lower interest rate.
D) lower price level results in a higher interest rate.

Question

Quizplus · Accepted Answer

The aggregate demand curve illustrates the inverse relationship between the price level and the quantity of real GDP demanded, meaning that as the price level increases, the quantity of real GDP demanded decreases, and vice versa. This is because higher prices reduce consumers' purchasing power, leading to a decrease in consumption, investment, and net exports.

The Aggregate Demand Curve Shows That, If Other Factors Are