In an economy, when the price level falls, consumers and firms buy more goods and services. This relationship is represented by the
A) aggregate expenditures curve.
B) aggregate demand curve.
C) short-run aggregate supply curve.
D) long-run aggregate supply curve.

Question

Quizplus · Accepted Answer

The inverse relationship between price level and quantity of goods and services demanded by consumers and firms is represented by the aggregate demand curve. As prices fall, consumers and firms are able to purchase more goods and services, leading to an increase in aggregate demand.

In an Economy, When the Price Level Falls, Consumers and Firms