Which of the Following Explanations for the Negative Slope of the AD

question 32

Multiple Choice

Which of the following explanations for the negative slope of the AD curve is correct? A fall in the price level,with an unchanged money supply,causes the transactions demand for money to

• A)decrease,shifting the M_D curve downward,lowering the interest rate and increasing desired investment,causing the AE curve to shift upward.
• B)decrease,shifting the M_D curve upward,raising the interest rate and increasing desired investment,causing the AE curve to shift upward.
• C)increase,shifting the M_D curve upward,raising the interest rate and decreasing desired investment,causing the AE curve to shift upward.
• D)increase,shifting the M_D curve downward,lowering the interest rate and decreasing desired investment,causing the AE curve to shift downward.
• E)increase,shifting the M_D curve upward,raising the interest rate and decreasing desired investment,causing the AE curve to shift downward.

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