A Rise in the Price Level Changes Aggregate Demand Because

question 339

Multiple Choice

A rise in the price level changes aggregate demand because

• A) the real value of peopleʹs wealth varies directly with the price level and so does their spending.
• B) the real value of peopleʹs wealth decreases and so they decrease their consumption.
• C) the more money people have, the more it is worth and hence the more goods and services they demand.
• D) firms increase their investment when prices are higher.

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