Which of the following is not a reason the aggregate demand curve slopes downward? As the price level increases
A. firms may believe the relative price of their output has risen.
B. real wealth declines.
C. the interest rate increases.
D. the exchange rate increases.
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For theU.S.economy, which of the following is the most important reason for the downward slope of the aggregate-demand curve?
A. the wealth effect
B. the interest-rate effect
C. the exchange-rate effect
D. the real-wage effect
Which of the following claims concerning the importance of effects that explain the slope of theU.S.aggregate demand curve is correct?
A. The exchange-rate effect is relatively small because exports and imports are a small part of real GDP.
B. The interest-rate effect is relatively small because investment spending is not very responsive to interest rate changes.
C. The wealth effect is relatively large because money holdings are a significant portion of most households' wealth.
D. None of the above is correct.
Liquidity preference refers directly to Keynes' theory concerning
A. the effects of changes in money demand and supply on interest rates.
B. the effects of changes in money demand and supply on exchange rates.
C. the effects of wealth on expenditures.
D. the difference between temporary and permanent changes in income.
Liquidity preference theory is most relevant to the
A. short run and supposes that the price level adjusts to bring money supply and money demand into balance.
B. short run and supposes that the interest rate adjusts to bring money supply and money demand into balance.
C. long run and supposes that the price level adjusts to bring money supply and money demand into balance.
D. long run and supposes that the interest rate adjusts to bring money supply and money demand into balance.
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