7. What is the interest rate effect that explains why the aggregate demand curve slopes downward? A) It refers to the effect of changes in the price level on quantity of investment demanded which in turn affects interest rates. B) It refers to the effect of interest rates on borrowing which in turn affects consumption spending. C) It refers to the effect of changes in the price level on interest rates which in turn affects the quantity of investment demanded. D) It refers to the shifts in aggregate demand when interest rates change. 8. All other things unchanged, a higher exchange rate A) reduces net exports and aggregate demand. B) reduces net exports and increases aggregate demand. C) increases net exports and aggregate demand. D) increases net exports and reduces aggregate demand. 9. Suppose investment rises by $50 billion at each price level. If the value of the multiplier is 1.5, what is the amount of change in real GDP demanded at each price level? A) $50 billion B) $75 billion C) $125 billion D) $150 billion
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7. |
What is the interest rate effect that explains why the aggregate |
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A) |
It refers to the effect of changes in the |
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B) |
It refers to the effect of interest rates on borrowing which in turn affects consumption spending. |
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C) |
It refers to the effect of changes in the price level on interest rates which in turn affects the quantity of investment demanded. |
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D) |
It refers to the shifts in aggregate demand when interest rates change. |
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8. |
All other things unchanged, a higher exchange rate |
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A) |
reduces net exports and aggregate demand. |
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B) |
reduces net exports and increases aggregate demand. |
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C) |
increases net exports and aggregate demand. |
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D) |
increases net exports and reduces aggregate demand. |
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9. |
Suppose investment rises by $50 billion at each price level. If the value of the multiplier is 1.5, what is the amount of change in real |
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A) |
$50 billion |
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B) |
$75 billion |
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C) |
$125 billion |
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D) |
$150 billion |
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