When the Price Level Falls

question 173

Multiple Choice

When the price level falls

• A)aggregate demand shifts to the left.
• B)all prices of individual goods and services decrease.
• C)aggregate demand shifts to the right.
• D)aggregate quantity demanded increases.
• E)the interest rate will increasE.

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Definitions:

Price Index

An average that measures the change in prices paid by consumers for goods and services over time, indicating inflation or deflation.

GDP

Gross Domestic Product, a measure of the economic performance of a country, indicating the total value of all goods and services produced over a specific time period.

Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, used to estimate inflation.

Real GDP

Real Gross Domestic Product (Real GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, providing a more accurate representation of an economy's size and growth rate.