When the U.S.price level decreases,we would expect:
A)a movement down along the aggregate demand curve.
B)a shift straight up of the aggregate demand curve.
C)a shift to the right of the aggregate demand curve.
D)None of these is true.

Question

Quizplus · Accepted Answer

When the U.S. price level decreases, it means that the overall prices for goods and services in the economy have gone down. As a result, consumers will be able to purchase more goods and services with their income. This leads to an increase in aggregate demand, as consumers are now willing and able to spend more. However, this increase in aggregate demand does not cause a shift in the curve but rather a movement down along the curve, as the level of inflation or price level decreases. Therefore, option A is the correct answer.

When the U.S.price Level Decreases,we Would Expect