Which statement does NOT accurately explain the slope of the aggregate-demand curve?
A) When interest rates fall, Phil decides to buy some new farm equipment.
B) The exchange rate falls, so Americans import more wheat from Canada.
C) Jake feels wealthier because of the price drop, so he decides to buy a new pick-up truck.
D) With prices down and wages fixed by contract, Rocky's gravel pit decides to lay off workers.

Question

Quizplus · Accepted Answer

The slope of the aggregate-demand curve is explained by factors such as interest rates, exchange rates, and the wealth effect, which influence the quantity of goods and services demanded at different price levels. Option D, which talks about a company laying off workers due to fixed wages and lower prices, does not explain the slope of the aggregate-demand curve but rather describes a supply-side decision.

Which Statement Does NOT Accurately Explain the Slope of the Aggregate-Demand