An Increase in the Price Level in the Aggregate Expenditures

question 122

Multiple Choice

An increase in the price level in the aggregate expenditures model would

• A) decrease aggregate expenditures and shift the AD curve to the left.
• B) increase aggregate expenditures and shift the AD curve to the right.
• C) decrease aggregate expenditures but would not shift the AD curve.
• D) increase aggregate expenditures but would not shift the AD curve.

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Definitions:

Hierarchy of Effects

A model describing the process by which an individual becomes aware of, develops feelings about, and finally takes action (like making a purchase) regarding a new product or service.

Interest

A charge for borrowing money, typically a percentage of the amount owed; or, alternatively, attention or concern towards a particular subject or activity.

Informing

The process of providing knowledge or information to someone, often seen as a crucial step in marketing to educate potential customers about products or services.

Involvement

The degree of personal relevance a consumer perceives in a purchasing decision, which can influence their buying behavior and loyalty.