Exhibit 20-6 Money, Investment and Product Markets

Exhibit 20-6 Money, investment and product markets

-In Exhibit 20-6,if the interest rate falls from i₁ to i₂,then:

A) the quantity demanded of investment increases from i₁ to i₂ and investment spending shifts the aggregate demand curve from AD₂ to AD₁, decreasing the level of real GDP.
B) the quantity demanded of investment increases from i₁ to i₂ and investment spending shifts the aggregate demand curve from AD₁ to AD₂, increasing the level of real GDP.
C) the quantity demanded of investment decreases from i₂ to i₁ and investment spending shifts the aggregate demand curve from AD₁ to AD₂, decreasing the level of real GDP.
D) the quantity demanded of investment decreases from i₂ to i₁ and investment spending shifts the aggregate demand curve from AD₂ to AD₁, increasing the level of real GDP.
E) the quantity demanded of investment stays the same causing the aggregate demand curve to shift from AD₂ to AD₁ decreasing the level of real GDP.