As the price level falls, citizen save more money because they feel wealthier. Financial frictions, prevent the interest rates from falling in the market for loanable funds. If these financial fractions are significant, will the interest rate affect still cause the aggregated demand curve to slow down ward?

As the price level falls, citizen save more money because they feel wealthier. Financial frictions, prevent the interest rates from falling in the market for loanable funds. If these financial fractions are significant, will the interest rate affect still cause the aggregated demand curve to slow down ward?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.2P

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