An increase in the aggregate price level will result in less investment and therefore an increase in the quantity of aggregate output demanded.
Indicate whether the statement is true or false.
Ans: False.
As the aggregate price level increases, people find they need more money to purchase the same basket of goods and services. Consumers bid up interest rates with their increased demand for money. As the interest rate increases, this results in less investment spending and therefore a reduction in the quantity of aggregate output demanded. Remember that an increase in the aggregate price level will cause a movement along the aggregate demand curve.
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The term "market" refers to
A) physical structures only. B) locations where buyers and sellers physically meet. C) any arrangement that enables buyers and sellers to get information and trade with one another. D) trading arrangements that have been approved by the government.
There is no need to allocate property rights in a market-based firm
Indicate whether the statement is true or false
A decrease in the price level makes consumers feel wealthier, so they purchase more. This logic helps explain why the aggregate demand curve slopes downward
a. True b. False Indicate whether the statement is true or false
The expenditure multiplier concept of the aggregate-expenditures model:
A. Is not at all relevant in the AD-AS model B. Magnifies the shifts of the aggregate demand curve C. Explains movement up or down the aggregate demand curve D. Reverses the shift of the aggregate demand curve