A Higher Real Interest Rate Reduces the Demand for Goods

question 2

Multiple Choice

A higher real interest rate reduces the demand for goods and services by:

• A) shifting the dynamic aggregate supply curve.
• B) decreasing the natural level of output.
• C) increasing inflation expectations.
• D) reducing investment and consumption spending.

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Definitions:

Ylide

A compound containing a positively charged atom directly bonded to a negatively charged atom, except oxygen or a halogen.

Carbanion

An ion that contains a negatively charged carbon atom, typically highly reactive in organic chemistry.

Carbocation

A species characterized by a carbon atom bearing a positive charge and three bonds instead of the usual four, making it highly reactive in organic reactions.

4-Phenylbutan-2-ol

An organic compound with the structure of butan-2-ol substituted with a phenyl group at the fourth carbon.