Which of the following is the most likely to occur when a decrease in the price level in an economy affects the wealth of consumers?
A) a rightward shift of the aggregate supply curve
B) a leftward shift of the aggregate demand curve
C) a movement along the aggregate demand curve
D) a leftward shift of the aggregate supply curve
E) a leftward shift of both the aggregate demand and aggregate supply curves

Question

Quizplus · Accepted Answer

A decrease in the price level in an economy makes consumers feel wealthier, which increases their propensity to consume. This does not shift the aggregate demand curve but rather results in a movement along the existing aggregate demand curve, as consumers are now willing to buy more goods and services at the lower price level.

Which of the Following Is the Most Likely to Occur