An increase in the overall price level _____ the interest rate, which leads to a decrease in investment spending and _____ the aggregate demand curve.
A) increases; a shift in
B) increases; a movement along
C) decreases; a shift in
D) decreases; a movement along

Question

Quizplus · Accepted Answer

An increase in the overall price level leads to higher interest rates, which decreases investment spending and results in a movement along the aggregate demand curve, not a shift.

An Increase in the Overall Price Level _____ the Interest