Other things constant,the economy's aggregate demand curve shows that
A)as the price level falls,so does real national income.
B)any change in the general price level causes the curve to shift.
C)real GDP decreases when the price level rises.
D)real GDP and the price level are not related.

Question

Quizplus · Accepted Answer

The aggregate demand curve illustrates the relationship between the overall price level and the total demand for goods and services in an economy. As the price level rises, the real purchasing power of money falls, leading to a decrease in the quantity of goods and services demanded, hence real GDP decreases. This inverse relationship is why option C is correct.

Other Things Constant,the Economy's Aggregate Demand Curve Shows That