If the price level decreases, then the aggregate expenditures schedule will shift and this translates into a:
A) Movement down along the aggregate demand curve
B) Shift in aggregate demand to the right
C) Shift in aggregate demand to the left
D) Movement up along the aggregate demand curve

Question

Quizplus · Accepted Answer

A decrease in price level results in a decrease in the cost of production, which in turn reduces the prices of goods and services, increasing the consumers' purchasing power, and increasing the demand for goods and services. As a result, the aggregate expenditures schedule shifts downward along the aggregate demand curve. This movement leads to the consumption of more goods at lower prices, which ultimately leads to the increase in aggregate demand.

If the Price Level Decreases, Then the Aggregate Expenditures Schedule