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

Question

Quizplus · Accepted Answer

According to the aggregate demand curve, if other factors are held constant, a higher price level results in a decrease in the quantity of real GDP demanded. This is because as prices increase, consumers and businesses reduce their spending and investment, leading to a decrease in demand and a contraction in the economy.

The Aggregate Demand Curve Shows That, If Other Factors Are