The AD curve ______ because, holding all else constant, an increase in ______ causes C, I^{P and NX to fall.} A)slopes downward; real GDP B)slopes downward; the inflation rate C)slopes upward; real GDP D)is horizontal; the inflation rate

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Quizplus · Accepted Answer

The AD curve slopes downward because, holding all else constant, an increase in the inflation rate leads to higher interest rates, which causes consumption (C), investment (I^P), and net exports (NX) to fall.

The AD Curve ______ Because, Holding All Else Constant, an Increase