ECONOMICS
AGGREGATE DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An increase of prices lead to
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a change along the AD curve to the right
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an outward shift of the AD curve
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an inward shift of the AD curve
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a change along the AD curve to the left
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Explanation:
Detailed explanation-1: -The aggregate demand curve tends to shift to the left when total consumer spending declines. 2 Consumers might spend less because the cost of living is rising or because government taxes have increased.
Detailed explanation-2: -Along the AD curve, real GDP increases and the price level decreases. In other words, AD slopes down. Changes in the price level will cause a movement along the AD curve.
Detailed explanation-3: -Answer and Explanation: The answer is false. The aggregate demand curve tells you what the Real GDP level is at any given price, so when the price level increases, you would just move to a different point on the aggregate demand curve.
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