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By looking at aggregate demand via its component parts, we can conclude that the aggregate
demand curve is downward sloping because ____.
A) a lower inflation rate causes the real interest rate to fall, and stimulates planned investment
spending
B) a lower inflation rate causes the real interest rate to rise, and stimulates planned investment
spending
C) a higher inflation rate causes the real interest rate to fall, and stimulates planned investment
spending
D) a higher inflation rate causes the real interest rate to rise, and stimulates planned investment
spending
Answer: A
Diff: 2 Type: MC Page Ref: 573
Skill: Recall
Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
of aggregate output and the inflation rate
Everything else held constant, an autonomous monetary policy easing ____ aggregate
____.
A) increases; demand
B) decreases; demand
C) decreases; supply
D) increases; supply
Answer: A
Diff: 2 Type: MC Page Ref: 573
Skill: Recall
Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
of aggregate output and the inflation rate
Everything else held constant, an autonomous monetary policy tightening ____ aggregate
____.
A) increases; demand
B) decreases; demand
C) decreases; supply
D) increases; supply
Answer: B
Diff: 2 Type: MC Page Ref: 573
Skill: Recall
Objective List: 24.1 Interpret the aggregate demand and supply framework for the determination
of aggregate output and the inflation rate