Use the Following to Answer Questions

question 88

Multiple Choice

Use the following to answer questions .
Exhibit: Investment Demand and Aggregate Demand
Figure 14-3
Panel (a) Panel (b)
-(Exhibit: Investment Demand and Aggregate Demand) Suppose the interest rate rises from 4.8% to 6% as shown in Panel (a) and the quantity of investment demanded falls from I_a to I_b. As a result of this, in Panel (b) ,

• A) the aggregate demand curve shifts from AD₁ to AD₂.
• B) the aggregate demand curve shifts from AD₂ to AD₁.
• C) the aggregate demand curve does not shift; there is a movement up along the prevailing aggregate demand curve.
• D) the aggregate demand curve does not shift; there is a movement down along the prevailing aggregate demand curve.