When the U.S. price level increases, economists predict a:
A) movement down along the aggregate demand curve.
B) shift straight up of the aggregate demand curve.
C) shift to the right of the aggregate demand curve.
D) decrease in expenditure.

Question

Quizplus · Accepted Answer

When the U.S. price level increases, the real purchasing power of money decreases, leading to a decrease in expenditure as consumers and businesses reduce their spending.