Which of the Following Best Explains the Slope of the AD

question 18

Multiple Choice

Which of the following best explains the slope of the AD curve?

• A)A change in inflation causes the real interest rate to change, which results in a change in spending.
• B)A change in potential GDP causes the rate of inflation to change, which leads to a change in the real interest rate.
• C)A change in the real interest rate causes the rate of inflation to change, which results in potential GDP changing.
• D)A change in real GDP causes potential GDP to change, which results in the rate of inflation changing.
• E)A change in inflation causes spending to change, which causes a change in the real interest rate.

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Definitions:

Negligible

So small or unimportant as to be not worth considering; insignificant.

Cognitive Revolution

A significant shift in psychology during the 1950s-1970s, emphasizing the study of the mind and mental processes over behaviorist approaches.

Human Behavior

The range of actions and mannerisms exhibited by humans, influenced by culture, attitudes, emotions, values, and genetics.

Methods of Science

Systematic and empirical approaches to the investigation and understanding of phenomena, involving observation, hypothesis, and experimentation.