An increase in the interest rate1
A)shifts the aggregate demand curve to the left
B)shifts the aggregate demand curve to the right
C)has no effect
D)moves the economy along the aggregate demand curve

Question

Quizplus · Accepted Answer

An increase in the interest rate typically reduces consumer spending and investment, leading to a decrease in aggregate demand. This is represented by a leftward shift of the aggregate demand curve.

An Increase in the Interest Rate1