-In the above figure, suppose the economy is initially at point a. If the nominal interest rate increases, there is a movement to point such as
A) e.
B) b.
C) d.
D) c.

Question

-In the above figure, suppose the economy is initially at point a. If the nominal interest rate increases, there is a movement to point such as
A) e. 
B) b. 
C) d. 
D) c.

Quizplus · Accepted Answer

An increase in the nominal interest rate will lead to a decrease in aggregate demand, which will shift the AD curve to the left. This will cause the equilibrium to move from point a to point e.

-In the Above Figure, Suppose the Economy Is Initially at Point