An increase in the price level leads to
A)a rightward shift of the aggregate demand curve.
B)a movement upward along the aggregate demand curve.
C)a movement downward along the aggregate demand curve.
D)neither a shift in the aggregate demand curve nor a movement along it.
E)a leftward shift of the aggregate demand curve.

Question

Quizplus · Accepted Answer

An increase in the price level causes a movement upward along the aggregate demand curve because as prices increase, consumers and businesses demand less goods and services. This leads to a lower quantity of real GDP demanded, causing a movement upward along the aggregate demand curve.

An Increase in the Price Level Leads to