-The figure above illustrates aggregate demand and aggregate supply in Sparta. Sparta's price level will rise above 100 if
A) government expenditure decreases.
B) the quantity of money increases.
C) the quantity of capital increases.
D) taxes increase.

Question

-The figure above illustrates aggregate demand and aggregate supply in Sparta. Sparta's price level will rise above 100 if
A) government expenditure decreases. 
B) the quantity of money increases. 
C) the quantity of capital increases. 
D) taxes increase.

Quizplus · Accepted Answer

An increase in the quantity of money typically leads to higher spending and demand, which can push the price level above its current state, assuming other factors remain constant. This is because more money in the economy boosts consumers' and businesses' purchasing power, leading to an increase in aggregate demand, which can drive prices up.

-The Figure Above Illustrates Aggregate Demand and Aggregate Supply in Sparta