There Are Several Reasons Why the Aggregate Demand Curve Is

question 227

Multiple Choice

There are several reasons why the aggregate demand curve is downward sloping. Which of the following correctly describes one of these explanations?

• A) A fall in the price level, holding foreign prices and the exchange rate constant, increases net exports.
• B) A rise in the price level raises the purchasing power wealth and increases desired consumption.
• C) A rise in the price level lowers the interest rate and increases investment spending.
• D) A rise in the price level raises interest rates and increases investment spending.

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Definitions:

Disaffirm

To reject, refuse to accept, or declare a contract void, often used in the context of minors’ capacity to enter into contracts.

Necessary

Essential or required for a particular purpose, without which the objective cannot be achieved.

Ratification

The action of signing or giving formal consent to a treaty, contract, or agreement, making it officially valid.

Emancipation

The process by which a minor becomes legally recognized as an independent adult, free from parental control.