Which Effect Best Explains the Downward Slope of the Aggregate

question 152

Multiple Choice

Which effect best explains the downward slope of the aggregate demand curve?

• A)a multiplier effect
• B)an income effect
• C)a substitution effect
• D)an interest rate effect

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Definitions:

With Interaction

A term indicating that the effect of one variable on a response variable depends on the level of another variable.

Interaction Term

An interaction term in statistics is a variable created from the product of two or more variables to capture the effect of their interaction on a dependent variable.

Dependent Variable

A variable in an experiment that is affected by changes in the independent variable.

Influenced

Refers to being affected or altered by an external factor or variable.