The following graph shows the aggregate demand curve in a hypothetical economy. Assume that the economy's money supply remains fixed. PRICE LEVEL (CPI) 160 150 140 130 + 120 110 100+ 90 - 80 0 Aggregate Demand 100 300 400 500 600 700 800 REAL GDP (Billions of dollars) 200 (?) Which of the following are reasons the aggregate demand curve is downward sloping? Check all that apply. A higher price level makes domestically produced goods more expensive than foreign goods. A lower price level leads to a lower interest rate. A higher price level decreases consumption through the substitution effect. As the aggregate price level rises, the purchasing power of households' saving balances will demanded to his phenomenon is known as the effect. , causing the quantity of output
The following graph shows the aggregate demand curve in a hypothetical economy. Assume that the economy's money supply remains fixed. PRICE LEVEL (CPI) 160 150 140 130 + 120 110 100+ 90 - 80 0 Aggregate Demand 100 300 400 500 600 700 800 REAL GDP (Billions of dollars) 200 (?) Which of the following are reasons the aggregate demand curve is downward sloping? Check all that apply. A higher price level makes domestically produced goods more expensive than foreign goods. A lower price level leads to a lower interest rate. A higher price level decreases consumption through the substitution effect. As the aggregate price level rises, the purchasing power of households' saving balances will demanded to his phenomenon is known as the effect. , causing the quantity of output
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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