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The negative slope of the aggregate demand curve is caused by: Question 24 optio

ID: 1102696 • Letter: T

Question


The negative slope of the aggregate demand curve is caused by:

Question 24 options:

a) the real wealth effect, the interest rate effect, and the price level effect.

b) the real wealth effect, the money supply effect, and the net export effect.

c) the interest rate effect, the net exports effect, and the real GDP effect.

d) the real wealth effect, the interest rate effect, and the net exports effect

Question 13 (1 point)

[Question 13 Unsaved]
An increase in the rate of interest, other things being equal, will cause a:

Question 13 options:

a) downward shift in the investment demand curve.
b) movement along the investment demand curve toward a higher rate of investment.
c) movement along the investment demand curve toward a lower rate of investment.
d) upward shift in the investment demand curve.

In short-run Keynesian model, investment is:

Question 12 options:

a) autonomous in relation to the interest rate.

b) upward sloping in relation to price level.

c) downward sloping in relation to disposable income.

d) autonomous in relation to real GDP.

Explanation / Answer

First question is answered below

1.
Correct option: (d) real wealth effect, interest rate effect and net export effect

Reason:
Under real wealth effect, as prices change, real wealth of consumers change thereby affecting demand

Under interest rate effect, higher prices result in higher interest rates and thus lower demand for investment

Under net export effect, change in prices of domestic goods will affect demand for foreign goods as they are substitute goods, thereby affecting their demand

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