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:

Portfolio Variance

A measure of the dispersion of returns of a portfolio, indicating the degree of investment risk.

Coefficient of Correlation

A statistical measure that calculates the strength and direction of a linear relationship between two variables, ranging from -1 to 1.

Risky Securities

Risky securities are investment products that come with a higher degree of uncertainty regarding their future value or return, often offering potentially higher rewards to compensate for the increased risk.

Linear Relationship

A relationship between two variables where the change in one variable is directly proportional to the change in another variable.