Explain How the Substitution Effect Will Affect Aggregate Demand When

Multiple Choice

Explain how the substitution effect will affect aggregate demand when the price level decreases.

A) The substitution effect will cause aggregate demand to increase.
B) The substitution effect will cause aggregate demand to decrease.
C) There is no substitution effect as there's no substitute for all goods.
D) There's no substitution effect if incomes are also rising.
E) There is a substitution effect that is smaller than the income effect,so it's uncertain what will happen to aggregate demand.