The quantity of aggregate output demanded will fall if
A) government spending increases.
B) the price level increases.
C) Aggregate supply increases.
D) net taxes are reduced.

Question

Quizplus · Accepted Answer

According to the aggregate demand curve, a higher price level leads to a lower quantity of aggregate output demanded, keeping all other factors constant. Therefore, if the price level increases, the quantity of aggregate output demanded will fall.

The Quantity of Aggregate Output Demanded Will Fall If