An increase in the price level will
A)shift the aggregate demand curve to the left
B)shift the aggregate demand curve to the right
C)result in a movement up to the left along the aggregate demand curve
D)result in a movement down to the right along the aggregate demand curve
E)have no effect on the aggregate quantity demanded

Question

Quizplus · Accepted Answer

An increase in the price level means that the purchasing power of each unit of money decreases. This leads to a decrease in real wealth and thus a decrease in consumer spending, which shifts the aggregate demand curve to the left. This results in a movement up to the left along the aggregate demand curve.

An Increase in the Price Level Will