What is the effect of an increase in the price level?
A)The real value of dollar-denominated assets will rise.
B)The aggregate expenditure line will shift downward.
C)The equilibrium level of output demanded will rise.
D)There will be downward movement along a particular aggregate demand curve.
E)The aggregate demand curve will shift rightward.

Question

Quizplus · Accepted Answer

An increase in the price level reduces the real purchasing power of money, leading to a decrease in consumption and investment, which shifts the aggregate expenditure line downward.

What Is the Effect of an Increase in the Price