A Rise in the Price Level Changes Aggregate Demand Because

question 142

Multiple Choice

A rise in the price level changes aggregate demand because

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

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