Which of the following is not a reason why the aggregate demand curve slopes downward?
A) The exchange-rate effect
B) The wealth effect.
C) The classical dichotomy/monetary neutrality effects.
D) The interest-rate effect
E) All of these answers are reasons why the aggregate-demand curve slopes downward.

Question

Quizplus · Accepted Answer

The classical dichotomy/monetary neutrality effects refer to the idea that changes in the money supply should only affect nominal variables, such as prices and wages, but not real variables, such as output and employment. This concept does not directly contribute to the downward slope of the aggregate demand curve, which is primarily driven by the exchange-rate effect, the wealth effect, and the interest-rate effect. Therefore, choice C is not a reason why the aggregate demand curve slopes downward.

Which of the Following Is Not a Reason Why the Aggregate