The Best Explanation of Why the Aggregate Demand Curve Has

question 19

Multiple Choice

The best explanation of why the aggregate demand curve has a negative slope is that

• A) at a higher price level households cut back on their spending on goods and services.
• B) at a higher price level business firms wish to produce more goods and services.
• C) a higher price level results in lower real money balances and a higher real interest rate.
• D) a higher price level results in less government spending on transfers, such as unemployment insurance and social security payments.

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Definitions:

Retinal Disparity

The slight difference in the visual information reaching each eye, enabling the perception of depth.

Reinforcers

Stimuli, which after being presented in conjunction with an action, increase the likelihood of that action being repeated in the future.

Color Constancy

The psychological feature that allows the human brain to perceive colors consistently under varying lighting conditions.

Motion Parallax

A depth cue in which objects closer to the observer move faster across the visual field than objects further away, creating a sense of depth.