Question

If consumption increases, a) the SRAS curve will shift rightward, which will push the price level up. b) the SRAS curve will shift leftward, which will push the price level up. c) the AD curve will shift leftward, which will push the price level down. d) the AD curve will shift rightward, which will push the price level up.

Answer 1

Answer: Option (d) is correct

If consumption increases, the AD curve will shift rightward, which will increase the price level.

Explanation:

If the consumption increases in an economy as a result there is a rightward shift in the aggregate demand curve. This shift in the aggregate demand curve lead to increase in the price level as well as in the output level.

Because there is more demand in the economy which gives an advantage for the producer to charge higher price.