Quizzol

QUESTION:

According to the interest-rate effect, aggregate demand slopes downward because _______.

a. lower prices decrease the value of money holdings and consumer spending decreases

b. lower prices reduce money holdings, increase lending, interest rates fall, and investment spending increases

c. lower prices increase money holdings, decrease lending, interest rates rise, and investment spending falls

d. lower prices increase the value of money holdings and consumer spending increases

ANSWER:

b. lower prices reduce money holdings, increase lending, interest rates fall, and investment spending increases

Posted by Cleveland on September 10, 2024