As the price level falls, the quantity of real wealth ________ and the aggregate quantity of real GDP demanded ________.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases

Question

Quizplus · Accepted Answer

When the price level falls, the real value of money and assets increases, leading to an increase in purchasing power. This, in turn, leads to an increase in the aggregate quantity of real GDP demanded as consumers are able to buy more goods and services with their increased real wealth.

As the Price Level Falls, the Quantity of Real Wealth