Other things constant, the economy's aggregate demand curve shows that
A) the quantity of real GDP demanded and the price level are not related.
B) any change in the price level shifts the aggregate demand curve.
C) as the price level falls, real GDP decreases.
D) the quantity of real GDP demanded decreases when the price level rises.

Question

Quizplus · Accepted Answer

According to the downward slope of the aggregate demand curve, as the price level rises, the quantity of real GDP demanded decreases. This is because consumers and firms reduce their spending due to the higher prices, resulting in a decrease in overall demand. Therefore, option D is the correct choice. Options A and C are incorrect as they are contradictory to the slope of the aggregate demand curve. Option B is incorrect as changes in prices do not necessarily shift the aggregate demand curve, rather they result in movements along the curve.

Other Things Constant, the Economy's Aggregate Demand Curve Shows That