Which one of the following does not explain why the AD curve slopes downwards?
A) A lower price level increases the competitiveness of the country's exports.
B) As the price level falls, the real value of money balances held increases. This increases the real purchasing power of consumers.
C) A lower price level increases the relative price of imports.
D) A lower price level increases the real money supply.
E) As the price level falls, people will save more in order to protect the real value of their savings.
Correct Answer:
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