The Most Important Reason for the Slope of the Aggregate-Demand

question 90

Multiple Choice

The most important reason for the slope of the aggregate-demand curve is that as the price level

• A)increases,interest rates increase,and investment decreases.
• B)increases,interest rates decrease,and investment increases.
• C)decreases,interest rates increase,and investment increases.
• D)decreases,interest rates decrease,and investment decreases.

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Definitions:

Law of Diminishing Returns

This economic law states that after a certain point, successive increments of a single factor of production yield progressively smaller increases in output.

Competitive Market

A market environment where numerous producers and consumers interact, leading to price competition and variety in products.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource, such as labor or capital, in the production process.

Purely Competitive

Characterizes a market structure where many competitors sell identical products, ensuring no single seller can influence market prices.