Which of These Statements Correctly Explains the Shape of the Aggregate

question 89

Multiple Choice

Which of these statements correctly explains the shape of the aggregate demand curve?

• A)As prices fall,nominal income rises and so does the demand for real goods and services.
• B)Rising prices reduce people's wealth and thereby decrease spending.
• C)With falling prices,government decides to spend less to increase the price level.
• D)Businesses increase investment spending in response to higher interest rates caused by inflation.
• E)As prices fall,domestically produced goods become more expensive relative to foreign goods,resulting in an increase in production.