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

Question

Quizplus · Accepted Answer

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

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