A decrease in the price level makes consumers feel more wealthy. How is this situation represented?
A) Aggregate demand shifts right.
B) Aggregate demand shifts left.
C) There is a movement to the right along a given aggregate-demand curve.
D) There is a movement to the left along a given aggregate-demand curve.

Question

Quizplus · Accepted Answer

When there is a decrease in the price level, this means that the purchasing power of consumers has increased. They can now buy more goods and services with the same amount of money which makes them feel more wealthy. As a result, there is a movement to the right along a given aggregate-demand curve.

A Decrease in the Price Level Makes Consumers Feel More