Substitution Effects Help Explain the Slope of the Aggregate Demand

question 113

Multiple Choice

Substitution effects help explain the slope of the aggregate demand curve. One substitution effect refers to the

• A) effect on investment expenditures that result from a change in interest rates produced by a change in the price level.
• B) direct relationship between the interest rate and the real value of wealth.
• C) change in wealth that results from a change in the interest rate.
• D) inverse relationship between the interest rate and the price level.

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