Final answer:
The correct answer is option b. A decrease in the price level affecting consumer wealth is most likely to cause a leftward shift of the aggregate demand curve. This results in a decrease in consumer spending, reduced output, and a lower price level, impacting the equilibrium in the economy.
Step-by-step explanation:
When a decrease in the price level in an economy affects the wealth of consumers, the most likely occurrence is a shift in the aggregate demand curve (AD). Specifically, this scenario typically results in a leftward shift of the aggregate demand curve. This shift signifies a reduction in the total amount of goods and services that consumers are willing and able to purchase at each price level. Consequently, this can lead to a lower quantity of output and a lower price level. It does not directly impact the aggregate supply curve (AS), unless other factors affecting supply are involved.
Being more precise, and according to the presented information, as consumer wealth decreases due to a fall in the price level, consumers tend to spend less. This decreased spending reflects decreased aggregate demand, hence a leftward shift of the AD curve. This can be observed in scenarios where consumer or business confidence dwindles, or during a reduction in government spending or higher taxes, which results in decreased consumer spending.
To convey this in the context of an equilibrium model: at the point where aggregate demand equals aggregate supply (AD = AS), a leftward shift of the AD curve will mean that the new equilibrium will have a lower quantity of output and also a lower price level than the original equilibrium. This can lead to a real GDP that is farther below potential GDP. Therefore, the correct option in the final answer is (b) a leftward shift of the aggregate demand curve.