The Aggregate Demand Curve Is Downward Sloping Because a Decrease

question 113

Multiple Choice

The aggregate demand curve is downward sloping because a decrease in the price level increases the ________ money supply which ________ interest rates and increases the equilibrium level of aggregate output,everything else held constant.

• A)real; lowers
• B)real; raises
• C)nominal; lowers
• D)nominal; raises

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Definitions:

Accounting Profits

The net income for a company calculated by subtracting total expenses from total revenues, according to standard accounting practices.

Economic Profits

The gap between a company's overall income and its combined explicit and implicit expenses.

Sales

Transactions involving the exchange of goods or services for money.

Explicit Costs

Direct, out-of-pocket payments for resources employed in the production of goods or services, such as wages, rent, and materials.