How does a price level affect aggregate demand?
1 Answer
Jul 3, 2015
consumers want to buy everything with the little they have.
Explanation:
consumers have unlimited wants and needs, whereas they have a limited number of resources.
if the price increases, they will be, within as economy, a decrease in the demand as consumers cant afford the increased commodity. this will cause a decrease in the aggregate (average) demand.
if the price decreases, then the price will attract more consumers into the market/industry, thus increasing the aggregate (average) demand.
