The quantity of real GDP demanded equals $12.4 trillion when the price level is 95.If the price level falls to 90,the quantity of real GDP demanded equals
A) less than $12.4 trillion.
B) $12.4 trillion.
C) more than $12.4 trillion.
D) more information is needed to determine if the quantity of real GDP demanded increases, decreases, or does not change.

Question

Quizplus · Accepted Answer

When the price level falls from 95 to 90, it means prices have decreased, which increases consumers' purchasing power, leading to an increase in demand for goods and services. Therefore, the quantity of real GDP demanded is likely to increase, making the correct choice C, i.e., more than $12.4 trillion.

The Quantity of Real GDP Demanded Equals $12