Figure 12.1
-Refer to Figure 12.1. Suppose the economy is currently at Point A. If interest rates decrease, the economy moves to Point:

Question

Quizplus · Accepted Answer

When interest rates decrease, investment demand increases. This leads to an increase in aggregate demand, which shifts the AD curve to the right. As a result, the economy moves from Point A to Point B, where output is higher and the price level is higher.

Figure 12.1 -Refer to Figure 12.1. Suppose the Economy Is Currently at Currently