Decreases in interest rates have made it less costly to finance purchases of new houses. What impact will this have on U.S. aggregate demand?
A) None. A nation's aggregate demand is not affected by changes in interest rates.
B) U.S. aggregate demand will remain unchanged.
C) U.S. aggregate demand will decrease.
D) The U.S. aggregate demand curve will shift to the right.

Question

Quizplus · Accepted Answer

Decreases in interest rates will make it more affordable to borrow money to finance purchases, which will increase overall spending in the economy. This increase in spending will shift the U.S. aggregate demand curve to the right.

Decreases in Interest Rates Have Made It Less Costly to Finance