The Aggregate-Demand Curve Slopes Downward Because When the Price Level

question 25

True/False

The aggregate-demand curve slopes downward because when the price level falls: (1) consumers feel wealthier, causing them to demand more consumer goods; (2) interest rates fall, causing firms and households to demand more investment goods; and (3) the exchange rate depreciates, causing net export demand to increase.

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Definitions:

Paper Clips

Tiny segments of twisted wire or plastic designed to keep pages of paper attached.

Marginal Utility

The additional satisfaction or utility a consumer receives from consuming one additional unit of a good or service.

Rutabagas

A root vegetable with a taste that is a mixture of cabbage and turnip, commonly used in cooking.

Broccoli

A green vegetable with a large flowering head, stalk, and small associated leaves, often eaten for its nutritional qualities.