How Does a Reduction in the Price Level Affect the Position

question 90

Multiple Choice

How does a reduction in the price level affect the position of the C + I + G + X curve and in turn the equilibrium level of real GDP?

• A) The C + I + G + X curve shifts down, thereby reducing the equilibrium level of real GDP.
• B) The C + I + G + X curve shifts down, thereby increasing the equilibrium level of real GDP.
• C) The C + I + G + X curve shifts up, thereby reducing the equilibrium level of real GDP.
• D) The C + I + G + X curve shifts up, thereby increasing the equilibrium level of real GDP.

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