The AD Curve Slopes Downward Because an Increase in ______

question 96

Multiple Choice

The AD curve slopes downward because an increase in ______ causes ______ to fall, which in turn causes real GDP to fall.

• A)the inflation rate; planned spending
• B)planned spending; the inflation rate
• C)real GDP; planned spending
• D)real GDP; the unemployment rate

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Definitions:

Cut the Price

To reduce the selling price of a product or service.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good changes in response to a change in its price.

Close Substitutes

Products or services that can be used in place of one another with little difference in satisfaction for the consumer, leading to a high cross-elasticity of demand.

Supply

The total amount of a good or service that is available for purchase at any given price level.