Asked by neeranjali kallydeen on Jun 11, 2024
Verified
For the U.S. economy, the most important reason for the downward slope of the aggregate-demand curve is the interest-rate effect.
Aggregate-Demand Curve
A visual depiction illustrating the connection between the total economy's price level and the aggregate demand for products and services at this specific price point.
Interest-Rate Effect
The change in spending and borrowing behavior in an economy due to a change in interest rates, often influencing total demand.
U.S. Economy
The economic system of the United States, characterized by a mixed economy with both private enterprise and government regulation.
- Understand the key factors affecting the slope of the aggregate-demand curve.
Verified Answer
BG
Bhargav GokulakondaJun 11, 2024
Final Answer :
True
Explanation :
The interest-rate effect is a key reason for the downward slope of the aggregate-demand curve because as the price level rises, people hold more money, leading to higher interest rates and lower investment spending, which in turn reduces the quantity of goods and services demanded.
Learning Objectives
- Understand the key factors affecting the slope of the aggregate-demand curve.