The Aggregate Demand Curve Slopes Downward to the Right Because

question 12

Multiple Choice

The aggregate demand curve slopes downward to the right because

• A)as prices decrease,the real value of the fixed quantity of money increases and thereby stimulates consumer spending.
• B)a lower price level reduces the price of domestic goods relative to foreign goods,increasing net exports (the international substitution effect).
• C)a lower price level reduces the demand for money and lowers the real interest rate,stimulating consumption and investment spending (the interest rate effect).
• D)all of the above are correct.

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