If the aggregate supply curve is upward sloping, then an increase in autonomous consumption leads to a(n)
A) increase in aggregate demand and a rise in the price level.
B) decrease in aggregate demand and a rise in the price level.
C) decrease in aggregate demand and a fall in the price level.
D) no change in aggregate demand and no change in the price level.

Question

Quizplus · Accepted Answer

An increase in autonomous consumption leads to an increase in aggregate demand, as consumers are spending more. However, since the aggregate supply curve is upward sloping, this increase in demand will lead to a rise in the price level as firms increase their prices to keep up with the increased demand.

If the Aggregate Supply Curve Is Upward Sloping, Then an Increase