Other things the same, an increase in the price level makes the dollars people hold worth
A) more, so they are willing to spend more.
B) more, so they are willing to spend less.
C) less, so they are willing to spend more.
D) less, so they are willing to spend less.

Question

Quizplus · Accepted Answer

An increase in the price level leads to a decrease in the purchasing power of the dollars people hold. Therefore, they are less willing to spend them, which is reflected in a decrease in the quantity of goods and services demanded.

Other Things the Same, an Increase in the Price Level