The Wealth Effect Explains Why The

question 289

Multiple Choice

The wealth effect explains why the:

• A) aggregate demand curve slopes downward since changes in aggregate price levels change the purchasing power of people's assets.
• B) aggregate supply curve slopes upward since an increase in wealth leads to more consumption.
• C) aggregate supply curve shifts since changes in wealth affect production.
• D) aggregate demand curve slopes upward since wealth allows consumers to purchase more regardless of the price level.

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Definitions:

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