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.

---

Definitions:

Utility Maximization

The process by which individuals choose consumption bundles that maximize their overall satisfaction or utility, subject to their budget constraints.

Indifference Map

A graphical representation that shows different bundles of goods between which a consumer is indifferent, reflecting their preferences and consumption choices.

Consumer Utility

The satisfaction or benefit a consumer receives from consuming a good or service.

Combination

The selection of items or data points from a larger set without regard to the order in which they are selected.