Other things being equal,what will occur as the price level increases?
A)Aggregate demand decreases.
B)The quantity of real gross domestic product demanded decreases.
C)Aggregate demand increases.
D)The quantity of real gross domestic product demanded increases.

Question

Quizplus · Accepted Answer

As the price level increases, there will be a decrease in the quantity of real gross domestic product demanded due to the decrease in purchasing power of consumers and the decrease in investment expenditure by firms. This is known as the negative relationship between price level and aggregate demand, also known as the wealth effect and interest rate effect.

Other Things Being Equal,what Will Occur as the Price Level