If the price level in Great Britain increases from 102 to 105 holding all else constant), real wealth____________ and there is a movement ____________ along Great Britainʹs aggregate demand curve.
A) increases; downward
B) increases; upward
C) decreases; upward
D) decreases; downward

Question

If the price level in Great Britain increases from 102 to 105 holding all else constant), real wealth____________  and there is a movement ____________ along Great Britainʹs aggregate demand curve.
A) increases; downward
B) increases; upward
C) decreases; upward
D) decreases; downward

Quizplus · Accepted Answer

When the price level increases, the real wealth of individuals decreases because the purchasing power of money is reduced. This leads to a movement upward along the aggregate demand curve as the quantity of goods and services demanded decreases.

If the Price Level in Great Britain Increases from 102