If the price level rises,
A)the aggregate expenditures line shifts upward; the economy moves downward along the aggregate demand curve
B)the aggregate expenditures line shifts downward; the economy moves upward along the aggregate demand curve
C)the aggregate demand curve shifts to the right; the economy moves along the aggregate expenditure line
D)the aggregate demand curve shifts to the left; the economy moves along the aggregate expenditure line
E)the aggregate expenditure line shifts upward; the aggregate demand curve shifts to the right

Question

Quizplus · Accepted Answer

When the price level rises, the aggregate expenditures line shifts downward because higher prices reduce real wealth and consumption, leading to less spending. Consequently, the economy moves upward along the aggregate demand curve as the quantity of goods and services demanded decreases.

If the Price Level Rises