A decrease in the price level a. increases the quantity of goods and services de
ID: 1114340 • Letter: A
Question
A decrease in the price level
a.
increases the quantity of goods and services demanded.
b.
increases the quantity of goods and services supplied in the short run.
c.
decreases the quantity of goods and services demanded.
d.
decreases the quantity of goods and services supplied in the long run.
An increase in the price level and a reduction in output would result from
a.
an increase in taxes.
b.
an increase in government expenditures.
c.
a decrease in the supply of an important resource.
d.
a fall in stock prices.
a.
increases the quantity of goods and services demanded.
b.
increases the quantity of goods and services supplied in the short run.
c.
decreases the quantity of goods and services demanded.
d.
decreases the quantity of goods and services supplied in the long run.
Explanation / Answer
Q1
Answer
Option a
The price level and aggregate demand are in an inverse relationship so the increase in price decreases quantity demanded.
Q2
Answer
option a
the increase in taxes decreases demand and increases the price level