Question

Why does aggregate demand slopes downwards, according to the interest rate effect?
a) lower prices increase money holdings, decrease lending, interest rates rise, and
investment spending falls.
b) lower prices increase the value of money holdings and consumer spending
increases.
c) lower prices decrease the value of money holdings and consumer spending
decreases.
d) lower prices reduce money holdings, increase lending, interest rates fall, and
investment spending increases.​

Answer 1

Answer:

lower prices increase money holdings, decrease lending, interest rates rise, and

investment spending falls.

Explanation:

the aggregate demand curve slopes downward lies in the relationship between interest rates and investment. A lower price level lowers the demand for money, because less money is required to buy a given quantity of goods.