Which of the Following Explains Why the Aggregate Demand Curve

question 238

Multiple Choice

Which of the following explains why the aggregate demand curve is downward sloping?

• A) the interest rate effect
• B) the real-balance effect
• C) the open economy effect
• D) all of the above

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Definitions:

Production Possibility Frontier

A graphical representation depicting the maximum output possibilities for two goods, given a set of inputs, highlighting the trade-offs in production choices.

Efficiency

The ability to achieve a desired outcome or output with the least waste of time, effort, or resources.

Production Possibility Curve

A graphical representation that shows the maximum possible output combinations of two goods or services an economy can achieve with existing resources and technology.

Capital

In economics, capital refers to the financial assets or the resources that businesses use to produce goods and services, such as equipment, buildings, and machinery.