The Dynamic Aggregate Demand Curve Is Downward Sloping Because as Inflation

question 9

Multiple Choice

The dynamic aggregate demand curve is downward sloping because as inflation falls, the central bank reduces the nominal interest rate by more than the fall in the inflation rate, which _____the real interest rate and _____ the quantity of goods and services demanded.

• A) decreases; decreases
• B) decreases; increases
• C) increases; increases
• D) increases; decreases

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Definitions:

Sales Discounts

Reductions in the price of goods sold, offered to customers as an incentive to either prompt payment or increase sales volume.

Vouchers Payable

Liabilities or debts owed by a company for purchases made on credit, documented by vouchers.

Gross Method

An accounting practice where purchases are recorded at their full invoice amount without deducting any purchase discounts.

Periodic Method

An accounting approach used to value inventory and determine the cost of goods sold in which physical counts are done periodically, typically at the end of an accounting period.