An increase in the price level makes consumers feel less wealthy.How is this situation represented?
A) Aggregate demand shifts right.
B) Aggregate demand shifts left.
C) There is a movement to right along a given aggregate-demand curve.
D) There is a movement to the left along a given aggregate-demand curve.

Question

Quizplus · Accepted Answer

An increase in the price level reduces the purchasing power of money and makes consumers feel poorer. This, in turn, reduces their ability and willingness to spend. As a result, the aggregate demand curve shifts to the left, reflecting a contraction in the overall demand for goods and services at any given price level. Therefore, the correct answer is D, there is a movement to the left along a given aggregate demand curve.

An Increase in the Price Level Makes Consumers Feel Less