Moving along the aggregate demand curve, a decrease in the quantity of real GDP demanded is a result of
A) an increase in income.
B) an increase in the price level.
C) a decrease in income.
D) a decrease in the price level.

Question

Quizplus · Accepted Answer

A decrease in the quantity of real GDP demanded can be caused by an increase in the price level, which leads to a decrease in the purchasing power of consumers and a decrease in consumption spending. This shifts the aggregate demand curve leftward, resulting in a lower quantity of real GDP demanded at each price level. Increases in income (choice A) would usually shift the aggregate demand curve rightward, so it is not the correct choice. A decrease in income (choice C) would also shift the aggregate demand curve leftward, but it is not the cause of a decrease in the quantity of real GDP demanded in this scenario. A decrease in the price level (choice D) would actually increase the quantity of real GDP demanded, so it is not the correct choice.

Moving Along the Aggregate Demand Curve, a Decrease in the Quantity