When the price level in an economy declines
A)the demand for money in the economy increases.
B)the nominal interest rate in the economy increases.
C)the total consumption in the economy reduces.
D)the aggregate demand in the economy increases.

Question

Quizplus · Accepted Answer

When the price level in an economy declines, the purchasing power of money increases, leading to an increase in aggregate demand as consumers are able to buy more goods and services for the same amount of money.

When the Price Level in an Economy Declines