The monetary transmission mechanism provides a partial explanation for the downward slope of the AD curve.For a given vertical MS curve,the explanation for the negative relationship between the price level and aggregate demand is as follows: A rise in the price level shifts the MD curve
A) to the right,the interest rate rises and desired investment expenditure rises.
B) to the left,the interest rate falls,and desired investment expenditure rises.
C) to the right,the interest rate rises and desired investment expenditure falls.
D) to the left,the interest rate rises and desired investment expenditure falls.
E) to the right,the interest rate falls and desired investment expenditure falls.
Correct Answer:
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