One Explanation of Why the Aggregate Demand Curve Is Downward

question 50

Multiple Choice

One explanation of why the aggregate demand curve is downward sloping is that

• A)as prices fall,nominal income rises and so does the demand for real goods and services
• B)rising prices reduce people's wealth and thereby reduce spending
• C)with falling prices,government decides to spend less to increase the price level
• D)businesses increase investment spending in response to higher interest rates caused by inflation
• E)as prices fall,domestically produced goods become more expensive relative to foreign-produced products,which increases production

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Definitions:

Heart

A muscular organ in most animals, which pumps blood through the blood vessels of the circulatory system.

Black

A color which is the result of the absence or complete absorption of visible light.

Probability

The numerical rating, from 0 to 1, indicating the chance an event will happen.

Fair Die

A die that is perfectly balanced, ensuring that each of its faces has an equal likelihood of landing up when thrown.