The quantity of real GDP demanded equals $16.2 trillion when the price level is 90. If the price level rises to 95, the quantity of real GDP demanded equals
A) less than $16.2 trillion.
B) $16.2 trillion.
C) more than $16.2 trillion.
D) more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change.

Question

Quizplus · Accepted Answer

According to the inverse relationship of the aggregate demand curve, as the price level increases, the quantity of real GDP demanded decreases. Therefore, if the price level increases from 90 to 95, the quantity of real GDP demanded must decrease from $16.2 trillion, making the correct answer (A) less than $16.2 trillion.

The Quantity of Real GDP Demanded Equals $16