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.

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Definitions:

Abstract Thinking

The ability to think about objects, principles, and ideas that are not physically present.

Neutral Stimulus

A stimulus that initially produces no specific response other than focusing attention.

Unconditioned Stimulus

A stimulus that naturally and automatically triggers a response without any prior learning.

Secondary Reinforcer

A stimulus that gains its reinforcing power through its association with a primary reinforcer; also known as a conditioned reinforcer.