Refer to the information provided in Figure 14.2 below to answer the questions that follow. Figure 14.2 -Refer to Figure 14.2. If the economy is currently at Point B and policy makers implement a policy which decreases the aggregate demand curve to AD₁, A) the price level will rise. B) the price level will fall. C) GDP will rise. D) the inflation rate will rise.

Question

Quizplus · Accepted Answer

When the aggregate demand curve shifts to the left from ADS to ADS1U1, it leads to a decrease in both price level and real GDP. Therefore, the correct answer is that the price level will fall.

Refer to the Information Provided in Figure 14