The best explanation of why the aggregate demand curve has a negative slope is that
A) at a higher price level households cut back on their spending on goods and services.
B) at a higher price level business firms wish to produce more goods and services.
C) a higher price level results in lower real balances and a higher real interest rate.
D) a higher price level results in less government spending on transfers, such as unemployment insurance and social security payments.
C
You might also like to view...
The new $20 bills were designed with features to make counterfeiting more difficult
a. True b. False Indicate whether the statement is true or false
Recessions are not identified for at least ________ months after it begins
a. 3 b. 4 c. 5 d. 6
Suppose that only one curve shifts. If you observe that the equilibrium price and equilibrium quantity increased, then the market experienced a(n):
A. decrease in supply. B. increase in demand C. increase in supply. D. decrease in demand.
When considering marginal revenue for the monopolist, which of the following is FALSE?
A) To sell more of a particular product, given the industry demand curve, the monopoly firm must lower the price. B) An essential point for the monopolist, marginal revenue is always less than price. C) Marginal revenue is always less than price because price must be reduced on all units to sell more. D) The more the monopolist wants to sell, the higher the price it has to charge in order to make more profits.