Which of the Following Would Help Explain Why the Aggregate

question 103

Multiple Choice

Which of the following would help explain why the aggregate demand curve slopes downward?

• A)An unexpectedly low price level raises the real wage,which causes firms to hire fewer workers and produce a smaller quantity of goods and services.
• B)A lower price level causes domestic interest rates to rise and the real exchange rate to appreciate,which stimulates spending on net exports.
• C)A higher price level increases real wealth,which stimulates spending on consumption.
• D)A lower price level reduces the interest rate,which encourages greater spending on investment goods.

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Definitions:

Deposits in Transit

Funds that have been received and recorded by a company but not yet credited by the bank, often seen in the reconciliation of bank statements.

Bank Statement Balance

The ending balance on a bank statement, representing the total amount of money in an account as recorded by the bank at the end of a given period.

Petty Cash Account

A small amount of cash kept on hand to pay for minor or incidental expenses.

Fund Replenishing

The process of adding money to a fund to restore its level after expenses have been incurred.