When the price level declines
A) the interest rate falls, and consumers borrow more funds, which causes a movement down along the aggregate demand curve.
B) interest rates fall, and consumers borrow more funds, which causes the aggregate demand curve to shift to the left.
C) the interest rate rises, and consumers borrow fewer funds, which causes a movement up the aggregate demand curve.
D) the interest rate is not affected, so there is no movement along the aggregate demand curve.
A
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The largest proportion of M1 is made up of
A) currency. B) checking account deposits. C) traveler's checks. D) savings account deposits.
If the money supply in the economy were at MS2, and the Federal Reserve Bank used open market operations to move money supply to MS3, the overall direct result in the economy would be:
A. Aggregate demand shifted in, causing GDP to fall.
B. Aggregate supply shifted in, causing GDP to fall.
C. Aggregate demand shifted out, causing GDP to rise
D. LRAS move to the FE level of output.
Scarcity is a situation in which resources are unlimited in quantity and can be used in different ways.
Answer the following statement true (T) or false (F)
In the long run, the economic profits of a monopolistically competitive firm
A) will tend to be larger than in the short run. B) equal zero. C) will be the average short-run profits earned in the last five years. D) will be the same as in the short run.