Which of the following statements is TRUE about the interest rate effect?
A. Expenditures will change as a result of a change in the real value of money balances when there is a change in the price level.
B. A higher price level lowers the interest rate, which causes business and consumers to increase their desired spending.
C. The interest rate effect is why the aggregate demand curve is upward sloping.
D. A lower price level lowers the interest rate, which causes businesses and consumers to increase their desired spending.
Answer: D
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In the above figure, Sheryl's monthly budget line for movies and plays shifted, as shown. The shift in the budget line is parallel, so the shift might be because
A) the price of a movie fell and nothing else changed. B) the price of a play fell and nothing else changed. C) Sheryl's income decreased and nothing else changed. D) Sheryl's income increased and nothing else changed.
In the long run the prices charged by a firm in monopolistic competition will be
a. high enough to provide profits to the firm. b. so low that many firms will drop out of the industry. c. equal to marginal cost. d. equal to average cost, including the opportunity cost of capital.
In 2007, the value of the American dollar rose relative to the euro
a. True b. False Indicate whether the statement is true or false
Unfair advertising practices are investigated by the Federal Trade Commission.
Answer the following statement true (T) or false (F)