Suppose Consumption Decreases at Each Price Level

question 186

Multiple Choice

Suppose consumption decreases at each price level.As a result,aggregate demand __________,and the AD curve shifts __________.

• A) increases; leftward
• B) decreases; leftward
• C) increases; rightward
• D) decreases; rightward

---

Definitions:

Deflation

A decrease in the general price level of goods and services in an economy over a period, often indicating reduced consumer demand or excessive supply.

Aggregate Demand Curve

The aggregate demand curve represents the total demand for goods and services in an economy at different price levels, generally showing an inverse relationship between price and output demanded.

Price Level

An index that measures the average changes in prices received by domestic producers for their output, affecting the purchasing power of money.

Cost-Push Inflation

An inflationary trend that results from an increase in the cost of production, leading to a decrease in supply and an increase in prices.