The Aggregate Demand Curve Has Its Particular Shape Because of Which

question 26

Multiple Choice

The aggregate demand curve has its particular shape because of which of the following explanations?

• A) A decrease in the aggregate price level will cause an increase in the real wage, a decrease in employment, and a decrease in output.
• B) A decrease in the aggregate price level will cause a decrease in the interest rate and an increase in output.
• C) As the aggregate price level increases, goods and services become relatively more expensive and individuals respond by decreasing the quantity demanded of goods and services.
• D) An increase in the money supply will cause an increase in the interest rate, a decrease in investment, and a decrease in output.
• E) An increase in the aggregate price level prompts the government to decrease government spending in the hope of bringing down prices.

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Definitions:

Population Values

The actual numerical values representing a characteristic of every individual member of a population.

Confidence Level

A measure indicating the probability that a given range includes the true value of an estimated parameter.

Confidence Interval

A confidence interval is a range of values, derived from sample statistics, that is likely to contain the value of an unknown population parameter, with a specified level of confidence.

Alpha (α)

In investing, alpha represents the excess returns of a portfolio relative to the return of a benchmark index. In statistics, it often denotes the level of significance in hypothesis testing.