As the price level increases,what is the impact on purchasing power and the quantity of RGDP demanded?
A)Purchasing power and the quantity of RGDP both decrease.
B)Purchasing power increases and the quantity of RGDP decreases.
C)Purchasing power and the quantity of RGDP both increase.
D)Purchasing power decreases and the quantity of RGDP increases.

Question

Quizplus · Accepted Answer

As the price level increases, the purchasing power of money decreases, which means that consumers can purchase fewer goods and services with the same amount of money. This typically leads to a decrease in the quantity of RGDP demanded since consumers are buying less. Therefore, both purchasing power and the quantity of RGDP demanded decrease.

As the Price Level Increases,what Is the Impact on Purchasing