Interest rates in the economy have risen. How will this affect aggregate demand and equilibrium in the short run?
A) Aggregate demand will fall, the equilibrium price level will fall, and the equilibrium level of GDP will fall.
B) Aggregate demand will fall, the equilibrium price level will rise, and the equilibrium level of GDP will fall.
C) Aggregate demand will rise, the equilibrium price level will rise, and the equilibrium level of GDP will rise.
D) Aggregate demand will rise, the equilibrium price level will fall, and the equilibrium level of GDP will rise.
Answer: A
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