The price level in India increases from 131 to 137 while its trading partners' price levels remain constant. As a result, people will buy ________ Indian-made goods and there will be a movement ________ along India's aggregate demand curve.
A) more; upward
B) more; downward
C) less; downward
D) less; upward

Question

Quizplus · Accepted Answer

When the price level in India increases while its trading partners' price levels remain constant, Indian-made goods become relatively more expensive. This leads to a decrease in the quantity of Indian-made goods demanded, resulting in a movement upward along India's aggregate demand curve.

The Price Level in India Increases from 131 to 137