The aggregate demand curve is downward sloping because a higher inflation rate leads the central bank to raise ________ interest rates,thereby ________ the level of equilibrium aggregate output. ,everything else held constant.
A)real;lowering
B)real;raising
C)nominal;lowering
D)nominal;raising

Question

Quizplus · Accepted Answer

A higher inflation rate leads the central bank to raise real interest rates, which lowers the level of equilibrium aggregate output, causing the aggregate demand curve to slope downward.

The Aggregate Demand Curve Is Downward Sloping Because a Higher