The Interest Rate Effect Suggests That the Negative Slope of the Aggregate

question 165

Multiple Choice

The interest rate effect suggests that the negative slope of the aggregate demand curve results because changes in the price level affect

• A) domestic purchases of foreign goods.
• B) the demand for money by households and firms.
• C) the real purchasing power of household wealth.
• D) the level of income.

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Definitions:

Systematic Desensitization

A behavior therapy used to reduce phobic anxiety through the gradual exposure to the feared stimulus paired with relaxation exercises.

Anxiety-arousing Stimuli

External events or circumstances that provoke anxiety responses.

Systematic Desensitization

A behavioral therapy technique used to reduce phobias or anxiety through gradual exposure to the feared object or situation while employing relaxation techniques.

Nausea-producing Drug

A medication that induces the sensation of wanting to vomit as a side effect.