Multiple Choice
In the context of the aggregate-demand curve,the interest-rate effect refers to the idea that,when the price level increases,
A) the real value of money decreases;in turn,the real value of the dollar increases in foreign exchange markets,which decreases net exports.
B) the real value of money decreases;in turn,interest rates increase,which decreases net exports.
C) households increase their holdings of money;in turn,interest rates decrease,which reduces spending on investment goods.
D) households increase their holdings of money;in turn,interest rates increase,which reduces spending on investment goods.
Correct Answer:
Verified
Correct Answer:
Verified
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