For the U.S. economy, which of the following is the most important reason for the downward slope of the aggregate-demand curve?
A)The wealth effect
B)The interest-rate effect
C)The exchange-rate effect
D)The real-wage effect

Question

Quizplus · Accepted Answer

The interest-rate effect is the most important reason for the downward slope of the aggregate-demand curve in the U.S. economy. As prices decrease, the real value of money increases, leading to lower interest rates, which encourages more investment and consumption, thus increasing aggregate demand.

For the US