The aggregate demand curve shows that, if other factors are held constant, a
A) lower price level results in inflationary conditions.
B) higher price level results in a decrease in the quantity of real GDP demanded.
C) higher price level results in an increase in the quantity of real GDP demanded.
D) higher price level results in a lower interest rate.

Question

Quizplus · Accepted Answer

The aggregate demand curve is downward sloping, indicating that as the price level rises, the quantity of real GDP demanded decreases, due to the wealth effect, interest rate effect, and exchange rate effect.

The Aggregate Demand Curve Shows That, If Other Factors Are