An increase in the price level in Canada will have what effect on the aggregate expenditure line?
A)Aggregate expenditure will shift downward.
B)Aggregate expenditure will become steeper.
C)Aggregate expenditure will shift upward.
D)Aggregate expenditure will shift downward and become less steep.
E)Aggregate expenditure will not be affected by an increase in the price level in the Canada.

Question

Quizplus · Accepted Answer

An increase in the price level leads to a decrease in real purchasing power of consumers causing a reduction in consumption expenditures, thereby shifting the aggregate expenditure line downward.

An Increase in the Price Level in Canada Will Have