As interest rates rise,the ____________ curve shifts _____________ resulting in a(n)_________________ in the price level and a(n)________________ in Real GDP.
A) AD; leftward; decrease; decrease
B) AD; rightward; increase; increase
C) SRAS; rightward; decrease; increase
D) SRAS; leftward; increase; decrease

Question

Quizplus · Accepted Answer

As interest rates rise, the cost of borrowing increases, leading to a decrease in consumption and investment spending. This causes a leftward shift in the aggregate demand (AD) curve. The decrease in spending also leads to a decrease in the demand for goods and services, which results in a decrease in the price level (inflation) and a decrease in Real GDP (output).

As Interest Rates Rise,the ____________ Curve Shifts _____________ Resulting in A(n)_________________

As Interest Rates Rise,the ______ Curve Shifts _ Resulting in A(n)___________