The AD curve slopes downward because an increase in ______ causes ______ to fall, which in turn causes real GDP to fall.
A)the inflation rate; planned spending
B)planned spending; the inflation rate
C)real GDP; planned spending
D)real GDP; the unemployment rate

Question

Quizplus · Accepted Answer

The AD (Aggregate Demand) curve slopes downward because an increase in the inflation rate causes planned spending to fall, which in turn causes real GDP to fall. This is due to the real balance effect, interest rate effect, and net export effect.

The AD Curve Slopes Downward Because an Increase in ______