Which of the Following Explanations for the Negative Slope of the AD

question 58

Multiple Choice

Which of the following explanations for the negative slope of the AD curve is correct? A fall in the price level, with an unchanged money supply, causes the transactions demand for money to

• A)decrease, shifting the M_D curve upward, raising the interest rate and increasing desired investment, causing the AE curve to shift upward.
• B)increase, shifting the M_D curve upward, raising the interest rate and decreasing desired investment, causing the AE curve to shift upward.
• C)decrease, shifting the M_D curve downward, lowering the interest rate and increasing desired investment, causing the AE curve to shift upward.
• D)increase, shifting the M_D curve downward, lowering the interest rate and decreasing desired investment, causing the AE curve to shift downward.
• E)increase, shifting the M_D curve upward, raising the interest rate and decreasing desired investment, causing the AE curve to shift downward.

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Definitions:

Emotional Reactivity

The extent to which individuals respond emotionally to stimuli or events, including the intensity and duration of those emotional responses.

Prefrontal Cortical Activity

Neural activity in the prefrontal cortex of the brain, associated with complex behaviors such as decision making, social interaction, and impulse control.

Positive Affectivity

The state or trait tendency to experience enthusiasm, alertness, joy, confidence, and determination.

Positive Well-being

A state of good mental and physical health, happiness, and life satisfaction.