Consider the following sequence of events:
Price level $\uarr\Rightarrow$demand for money $\uarr\Rightarrow$equilibrium interest rate $\uarr\Rightarrow$quantity of goods and services demanded $\downarrow$
This sequence explains why the

Question

Quizplus · Accepted Answer

The sequence describes the interest rate effect, which is one reason the aggregate-demand curve slopes downward. As the price level rises, the demand for money increases, leading to higher interest rates, which reduces the quantity of goods and services demanded.

Consider the Following Sequence of Events: Price Level ↑⇒\uarr\Rightarrow↑⇒ Demand for Money

Consider the Following Sequence of Events:
Price Level $\uarr\Rightarrow$ Demand for Money