Which of the following questions is false?
A) Purchasing power and the price level are inversely related.
B) The real balance effect refers to the change in the purchasing power of dollar-denominated assets as a result of a change in the price level.
C) The aggregate demand curve slopes downward because of the real balance, interest rate, and international trade effects.
D) A change in the quantity demanded of Real GDP is directly brought about by a change in interest rates.

Question

Quizplus · Accepted Answer

A change in interest rates would affect the quantity demanded of Real GDP indirectly through its impact on consumption, investment, and net exports. Therefore, it is false that a change in the quantity demanded of Real GDP is directly brought about by a change in interest rates.

Which of the Following Questions Is False