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.

---

Definitions:

Yield

The income return on an investment, typically expressed as a percentage, indicating the interest or dividends received.

Long-Term Corporate Bonds

Bonds issued by corporations with maturities longer than ten years, offering fixed interest payments.

Eurobonds

Bonds issued in a currency other than the currency of the country or market in which it is issued, often used by companies to raise capital in foreign markets.

Yankee Bonds

Bonds issued by foreign entities in the U.S. market, denominated in U.S. dollars, to raise capital from American investors.