The aggregate demand curve has the usual downward slope,since a ________ price level ________ the real money supply,raises interest rates,and lowers the equilibrium level of aggregate output,everything else held constant.
A)lower; reduces
B)lower; increases
C)higher; reduces
D)higher; increases

Question

Quizplus · Accepted Answer

A higher price level reduces the real money supply, which raises interest rates and lowers the equilibrium level of aggregate output, according to the quantity theory of money. Therefore, the aggregate demand curve has a downward slope.

The Aggregate Demand Curve Has the Usual Downward Slope,since a ________