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:

Misconceptions

Incorrect beliefs or ideas stemming from misinformation or misunderstanding.

Maslow's Hierarchy

A psychological theory proposed by Abraham Maslow that suggests human needs are arranged in a hierarchy from the most basic physical needs to higher psychological needs, culminating in self-actualization.

Full Potential

The highest or fullest level of performance or achievement one can realistically attain.

Self-Respect

The regard one holds for oneself as a worthwhile, competent individual, often seen as a crucial aspect of mental health.