A decrease in the price level leads to a rightward shift in the aggregate demand curve because it increases consumption, investment, and net exports.判断题
A
True
B
False

Question

A decrease in the price level leads to a rightward shift in the aggregate demand curve because it increases consumption, investment, and net exports.

BlackTom AI · Accepted Answer

A lower price level raises real wealth and lowers interest rates, which increases consumption, investment, and net exports—so the statement is True.

1) Relevant concepts
- Aggregate demand (AD) shows the total quantity of goods and services demanded at each price level.
- Three standard channels linking the price level to aggregate demand: the real‑balance (Pigou) effect on consumption, the interest‑rate (Keynes) effect on investment, and the foreign‑purchase (exchange‑rate) effect on net exports.
- “Rightward shift” vs. “movement”: here interpreted as an increase in aggregate demand (more real spending) resulting from the lower price level.

2) Step‑by‑step reasoning
- Real‑balance (Pigou) effect: When the general price level falls, the real value of money balances (purchasing power of wealth) rises. Households feel wealthier and raise consumption. Higher consumption increases aggregate demand.
- Interest‑rate (Keynes) effect: A lower price level reduces the demand for nominal money for transactions. With a fixed nominal money supply, the excess real money balances put downward pressure on interest rates. Lower interest rates stimulate business investment and some consumer spending on durable goods, boosting aggregate demand.
- Foreign‑purchase (exchange‑rate) effect: If domestic prices fall relative to foreign prices, domestic goods become cheaper for foreigners and foreign goods become relatively more expensive for domestic residents. Exports rise and imports fall, so net exports increase, adding to aggregate demand.

3) Intermediate steps / causality chain (no numerical calculation)
- Price level ↓ → real money balances ↑ → consumption ↑ (Pigou) → AD ↑
- Price level ↓ → money demand ↓ → interest rate ↓ → investment ↑ → AD ↑
- Price level ↓ → relative price of domestic goods ↓ → exports ↑, imports ↓ → net exports ↑ → AD ↑

4) Why this makes the statement correct
All three channels increase components of aggregate demand when the price level falls. These increases combine to raise total demand for output at that lower price level—interpreted as a rightward/increased aggregate demand outcome.

5) Why the other option (“False”) is incorrect
Saying False would deny that lower prices raise consumption, investment, and net exports. Empirical theory and standard macroeconomic mechanisms show these increases do occur when the price level falls.

Conclusion: The correct answer is True, matching the provided answer.

A decrease in the price level leads to a rightward shift in the aggregate demand curve because it increases consumption, investment, and net exports.判断题

类似问题

A decrease in real GDP in the United States relative to foreign countries will decrease U.S. net exports and shift the aggregate demand curve to the left.

What would lower aggregate demand (AD)?

Why is aggregate demand (AD) downward-sloping?

What would shift aggregate demand (AD) to the right?

What would lower aggregate demand (AD)?

Why is aggregate demand (AD) downward-sloping?

What would shift aggregate demand (AD) to the right?

The aggregate demand curve is downward sloping because a higher inflation rate leads the central bank to raise interest rates, thereby equilibrium output.

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A decrease in the price level leads to a rightward shift in the aggregate demand curve because it increases consumption, investment, and net exports.判断题

类似问题

A decrease in real GDP in the United States relative to foreign countries will decrease U.S. net exports and shift the aggregate demand curve to the left.

What would lower aggregate demand (AD)?

Why is aggregate demand (AD) downward-sloping?

What would shift aggregate demand (AD) to the right?

What would lower aggregate demand (AD)?

Why is aggregate demand (AD) downward-sloping?

What would shift aggregate demand (AD) to the right?

The aggregate demand curve is downward sloping because a higher inflation rate leads the central bank to raise ________ interest rates, thereby ________ equilibrium output.

更多留学生实用工具

希望你的学习变得更简单

The aggregate demand curve is downward sloping because a higher inflation rate leads the central bank to raise interest rates, thereby equilibrium output.