An increase in the price level, other things equal, will shift the:
A) Consumption, investment, and net exports schedules of the aggregate expenditures model downward
B) Consumption, investment, and net exports schedules of the aggregate expenditures model upward
C) Consumption, and investment schedules of the aggregate expenditures model upward, but the net exports schedule downward
D) Consumption, and net exports schedules of the aggregate expenditures model upward, but the investment schedule downward

Question

Quizplus · Accepted Answer

An increase in the price level leads to a decrease in the real value of money and, in turn, a decrease in consumption, investment and net exports. This shift downward in all three schedules will shift the aggregate expenditures model downward.

An Increase in the Price Level, Other Things Equal, Will