A fall in the price level
A)moves the economy rightward along the aggregate demand curve
B)moves the economy leftward along the aggregate demand curve
C)shifts the aggregate demand curve to the left
D)shifts the aggregate demand curve to the right
E)is inconsistent with the other-things-constant assumption on which the aggregate demand curve is based

Question

Quizplus · Accepted Answer

A fall in price level reduces the cost of production and encourages firms to increase output. This leads to a rise in real GDP and movement rightward along the AD curve.

A Fall in the Price Level