As the price level falls and other things remain the same,real wealth ________ and ________.
A) decreases; short-run aggregate supply decreases
B) decreases; the quantity of real GDP demanded decreases
C) increases; aggregate demand increases
D) increases; the quantity of real GDP demanded increases

Question

Quizplus · Accepted Answer

As the price level falls, the purchasing power of money increases, allowing individuals to purchase more goods and services with the same amount of money. This increases the quantity of real GDP demanded because there is a higher demand for goods and services due to the increased purchasing power of money. Therefore, real wealth increases and the quantity of real GDP demanded increases.

As the Price Level Falls and Other Things Remain the Same,real