As interest rates rise,the ____________ curve shifts _____________ resulting in a(n)_________________ in the U.S.price level and a(n)________________ in Real GDP.
A) AD; leftward; decrease; decrease
B) AD; rightward; increase; increase
C) SRAS; rightward; decrease; increase
D) SRAS; leftward; increase; decrease

Question

Quizplus · Accepted Answer

When interest rates rise, the AD (aggregate demand) curve shifts leftward due to a decrease in consumption and investment. This results in a decrease in the U.S. price level and a decrease in Real GDP. Choice B is incorrect because a rise in interest rates would not increase AD, and the opposite would happen. Choices C and D also do not accurately reflect what would happen with a rise in interest rates.

As Interest Rates Rise,the ____________ Curve Shifts _____________ Resulting in A(n)_________________

As Interest Rates Rise,the ______ Curve Shifts _ Resulting in A(n)___________