If the actual price level in the macro economy is below the equilibrium price level:
A) excess demand will drive prices back up to the equilibrium price
B) excess demand causes the demand curve to move inwards
C) excess demand causes the demand curve to move outwards
D) excess supply will drive prices back up to the equilibrium price

Question

Quizplus · Accepted Answer

When the actual price level is below the equilibrium price level, there is excess demand, which leads to upward pressure on prices as buyers compete for the limited goods available, driving prices back up to the equilibrium level.

If the Actual Price Level in the Macro Economy Is