A rise in the aggregate price level will,other things equal,lead to a(n):
A) rightward shift in the AD curve.
B) leftward shift in the AD curve.
C) decrease in the quantity of aggregate output demanded.
D) increase in the quantity of aggregate output demanded.

Question

Quizplus · Accepted Answer

A rise in the aggregate price level indicates inflation, thus causing a decrease in the purchasing power of consumers. As a result, they will demand less aggregate output, leading to a decrease in the quantity of aggregate output demanded, which is option C. Therefore, options A and D are incorrect because they suggest an increase in demand, and option B is incorrect because it suggests a leftward shift in the aggregate demand curve, which would indicate a decrease in demand at all price levels.

A Rise in the Aggregate Price Level Will,other Things Equal,lead