Which of the following would not be an expected response from a decrease in the price level and so help to explain the slope of the aggregate-demand (AD) curve?
A.With prices down and wages fixed by contract, Millio’s Frozen Pizzas decides to lay off workers.
B.When interest rates fall, Sleepwell Hotels decides to build some new hotels.
C.The exchange rate falls, so French restaurants in Paris buy more Iowa pork.
D.Janet feels wealthier because of the price-level decrease and so she decides to remodel her bathroom.

With prices down and wages fixed by contract, Milli's Frozen Pizzas decides to lay off workers would not be an expected response from a decrease in the price level.

What happens to the budget line if prices don't change but consumer income does?

Consumers will switch to the consumption of lower combinations of goods or services if their income declines. Since the cost of the commodities has not changed, the budget line will drop downward but the slope stays the same.

When one or both product prices fluctuate while nominal revenue (budget) stays the same, the budget line will alter. a change in the nominal income level with no change in the relative prices of the two goods.

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