Exhibit 20-5 Money, investment and product markets
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In Exhibit 20-5, if the interest rate falls from i1 to i2, investment spending will:
A. increase, and aggregate demand will shift from AD1 to AD2.
B. decrease, and aggregate demand will shift from AD2 to AD1.
C. remain the same, and aggregate demand will shift from AD2 to AD3.
D. increase, and aggregate demand will shift from AD2 to AD1.
Answer: A
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