Why does the aggregate expenditure line shift downward when the price level incr

Question

Why does the aggregate expenditure line shift downward when the price level increases? An increase in the price level lowers the equilibrium interest rate and, thus, lowers Interest-sensitive spending. An increase in the price level shifts the money supply curve leftward and, thus, lowers interest-sensitive spending. An increase in the price level raises the equilibrium interest rate and lowers interest-sensitive spending. An increase in the price level shifts the money demand curve leftward and, thus, lowers interest-sensitive spending.

Explanation / Answer

(d) An increase in price level shifts money demand curve leftward and thus lowers interest sensitive spending

(An increase in price level will decrease demand for the good, due to law of demand, shifting the dmenad curve to the left, and thus expenditure made falls)

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