The aggregate quantity of goods and services demanded changes as the price level rises because
A)real wealth falls,interest rates rise,and the dollar appreciates.
B)real wealth falls,interest rates rise,and the dollar depreciates.
C)real wealth rises,interest rates fall,and the dollar appreciates.
D)real wealth rises,interest rates fall,and the dollar depreciates.

Question

Quizplus · Accepted Answer

When the price level rises, the purchasing power of people's wealth falls, leading to a decrease in real wealth. As a result, people tend to reduce their consumption, lowering the aggregate demand for goods and services. This decline in demand leads to an increase in interest rates and a strengthened dollar, as the demand for money rises. Therefore, option A is the correct choice.

The Aggregate Quantity of Goods and Services Demanded Changes as the Price