When Nominal Interest Rates Are Are Zero, the AD Curve

question 76

Multiple Choice

When nominal interest rates are are zero, the AD curve has a ________ slope because when aggregate output decreases the monetary authorities ________ lower the nominal interest rate. As inflation rises the real interest rate _______which will ________ investment and aggregate output.

• A) negative; can; increases; decrease
• B) negative; cannot; decrease; increase
• C) positive; cannot; increases; decrease
• D) positive; can; decreases; decrease

---

Definitions:

Craigslist

An online platform that provides classified advertisements for a wide range of services, products, and job listings.

Overstock Quantity

Excess inventory that exceeds the demand, often resulting in decreased cash flow, increased storage costs, and potential waste.

Optimal Quantity

Optimal quantity is the most efficient amount of goods or resources needed to minimize costs and maximize value or profitability.

Wholesale Price

Wholesale Price is the cost of goods sold in large quantities for the purpose of resale by retailers, often lower than the retail price to allow for margins.