The Aggregate Demand Curve Slopes Downward Because

question 26

Multiple Choice

The aggregate demand curve slopes downward because

• A)a decrease in the price level decreases the real value of household wealth
• B)a decrease in the domestic price level increases imports
• C)an increase in the price level leads to a decrease in demand for money,which decreases interest rates
• D)a decrease in the domestic price level increases exports
• E)none of the above

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Definitions:

Automatic Stabilizer

Economic policies and programs, such as unemployment insurance and taxation, that automatically adjust to counteract economic fluctuations without additional government intervention.

Natural Rate

Often refers to the natural rate of unemployment, indicating the lowest unemployment rate an economy can sustain over the long term without causing inflation.

Unemployment

The situation where individuals who are able and willing to work do not find jobs, expressed as a percentage of the labor force.

Real GDP

The measure of a country's economic output adjusted for price changes (inflation or deflation), reflecting the real quantity of goods and services produced.