Multiple Choice
Which of the following explains why the AD curve is downward sloping?
A) a lower price level forces the government to reduce taxes,shifting the IS curve to the right and increasing income.
B) A lower price level forces the central bank to increase the money supply,shifting the LM curve to the right and increasing income.
C) A lower price level increases real money balances,shifting the LM curve to the right and increasing income.
D) none of the above are correct.
Correct Answer:
Verified
Correct Answer:
Verified
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