Which of the Following Best Explains the Slope of the AD

question 18

Multiple Choice

Which of the following best explains the slope of the AD curve?

• A)A change in inflation causes the real interest rate to change, which results in a change in spending.
• B)A change in potential GDP causes the rate of inflation to change, which leads to a change in the real interest rate.
• C)A change in the real interest rate causes the rate of inflation to change, which results in potential GDP changing.
• D)A change in real GDP causes potential GDP to change, which results in the rate of inflation changing.
• E)A change in inflation causes spending to change, which causes a change in the real interest rate.

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Definitions:

Unemployment Rate Trend

The direction and pattern over time in the unemployment rate, indicating whether joblessness is increasing, decreasing, or remaining stable within an economy.

1980's

A decade known for significant economic, political, and cultural events and developments worldwide.

Downward Trend

Describes a situation where there is a consistent decline in the value or level of a financial instrument, market index, or economic performance over time.

Discouraged Workers

Individuals not looking for work because they believe no jobs are available for them.