-In the Figure Above, the Shift in the Aggregate Demand

question 26

Multiple Choice

-In the figure above, the shift in the aggregate demand curve from AD₁ to AD₃ could be the result of

• A)a decrease in the real interest rate.
• B)a decrease in the buying power of money.
• C)an increased expectation of a recession that lowers the expected rate of profit from investment.
• D)a decrease in the foreign exchange rate.
• E)an increase in the price level.

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Definitions:

Variable Rate Loans

Loans with interest rates that can fluctuate over time based on an underlying benchmark rate or index.

Tranches

Portions or slices of debt or securities that are structured to divide risk or return in a way that is marketable to different investors.

Credit Risk

Credit risk refers to the possibility that a borrower will default on a loan by failing to make the necessary payments.

Seniority

The order of repayment in the event of a sale or bankruptcy, with higher seniority debts being repaid before those of lower seniority.