Based on our understanding of the aggregate demand curve, we know that a(n) _______ in the price level causes the quantity of real GDP demanded to _______.
A) decrease; increase
B) decrease; decrease
C) decrease; remain unchanged
D) increase; increase

Question

Quizplus · Accepted Answer

A decrease in the price level leads to an increase in the quantity of real GDP demanded because lower prices increase consumers' purchasing power, leading to higher consumption and investment.

Based on Our Understanding of the Aggregate Demand Curve, We