A decrease in the price level will _______________Question 1Answera.shift the aggregate demand curve to the left.b.shift the aggregate demand curve to the right.c.move the economy down along a stationary aggregate demand curve.d.move the economy up along a stationary aggregate demand curve.
Question
A decrease in the price level will _______________Question 1Answera.shift the aggregate demand curve to the left.b.shift the aggregate demand curve to the right.c.move the economy down along a stationary aggregate demand curve.d.move the economy up along a stationary aggregate demand curve.
Solution
The correct answer is c. move the economy down along a stationary aggregate demand curve.
Here's why:
The aggregate demand curve shows the quantity of all goods and services demanded in the economy at any given price level. If the price level decreases, it does not shift the aggregate demand curve. Instead, it moves the economy down along the stationary aggregate demand curve. This is because, at a lower price level, consumers have more purchasing power and can buy more goods and services, hence increasing the quantity demanded. This movement is along the curve, not a shift of the curve itself. A shift in the aggregate demand curve would require a change in a non-price level factor like government spending, consumer confidence, or net exports.
Similar Questions
When inflation decreases,ResponsesA the aggregate demand curve shifts to the right.the aggregate demand curve shifts to the right.B there is an upward movement along the aggregate demand curve.there is an upward movement along the aggregate demand curve.C there is a downward movement along the aggregate demand curve.there is a downward movement along the aggregate demand curve.D the aggregate demand curve shifts to the left.
The effect on the aggregate demand of a decrease in the price level is represented by a/an _______________ the AD curve. upward movement along downward movement along upward shift of leftward shift of None of the above are correct
A change in demand is said to take place when there is a A. shift of the demand curve. B. shift of the supply curve. C. price change. D. movement along the demand curve. E. quantity change.
If consumption or gross investment is increasing because of the lower price level, that’s a:Multiple choice question.movement along the aggregate demand.neither a shift of the aggregate demand nor a movement along the aggregate demand.shift of the aggregate demand.both a shift of the aggregate demand and a movement along the aggregate demand.
An increase in the interest rate __________________.a.Shifts the aggregate demand curve to the leftb.Shifts the aggregate demand curve to the rightc.Has no effectd.Moves the economy along the aggregate demand curveClear my choice
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