The wealth effect is reflected in:
A) increases in interest rates to savers.
B) the upward slope in aggregate supply.
C) the upward slope in aggregate demand.
D) the downward slope in aggregate demand.

Question

Quizplus · Accepted Answer

The wealth effect is one reason for the downward slope of the aggregate demand curve. As the price level falls, the real value of money increases, making consumers feel wealthier, which increases consumption and thus aggregate demand.

The Wealth Effect Is Reflected In