Lower aggregate demand automatically results in
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The aggregate demand curve slopes downward because when the price level is lower, people can afford to buy more, and aggregate demand rises. When prices rise, people can afford to buy less, and aggregate demand falls. Is this a good explanation of the shape of the aggregate demand curve? Why and why not?
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Which of the following best describes the cause-effect chain of a restrictive monetary policy?
A. A decrease in the money supply will lower the interest rate, increase investment spending, and increase ยท aggregate demand and GDP.
B A decrease in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
C An increase in the money supply will raise the interest rate, decrease investment spending, and decrease aggregate demand and GDP.
D An increase in the money supply will lower the interest rate, decrease investment spending, and increase aggregate demand and GDP.ย
The effect of an expansionary fiscal policy on increasing demand is partially set by lower aggregate demand due to