If the overall price level increases, it will cause a decrease in the quantity of real goods and services demanded but not a change in aggregate demand curve.

Question

Quizplus · Accepted Answer

An increase in the overall price level causes a decrease in the purchasing power of consumers and a decrease in the quantity of real goods and services demanded. However, it does not cause a shift in the aggregate demand curve, which represents the relationship between the overall price level and the real GDP demanded. The aggregate demand curve shifts due to changes in factors such as consumer and business confidence, government policies, and global economic conditions, among others.

If the Overall Price Level Increases, It Will Cause a Decrease