The total investment spending in an economy decreases as a result of an increase in the interest rate, which is driven by an increase in the overall price level. This will be represented as a:
A) rightward shift of the aggregate demand curve.
B) leftward shift of the aggregate demand curve.
C) movement along the aggregate demand curve.
D) leftward shift of the short-run aggregate supply curve.

Question

Quizplus · Accepted Answer

An increase in the interest rate due to a rise in the overall price level leads to a movement along the aggregate demand curve, not a shift.

The Total Investment Spending in an Economy Decreases as a Result