o 11/6/2017 06:00 PM 8.1/10 Gradebook PrintCalculator Question 4 of 6 Map Saplin
ID: 1104380 • Letter: O
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o 11/6/2017 06:00 PM 8.1/10 Gradebook PrintCalculator Question 4 of 6 Map Sapling Learning macmilan learning Shitepasint tnednictreaprega ea 9emand (AD) curve in the graph below to ilutrate the effectof a Choose the answer that best explains the impact the decrease in the price level you illustrated in the graph. 145 140 135 130 125 120 115 110 105 100 95 The decrease in the price level, all else equal, makes exports relatively less expensive, increasing the quantity of aggregate goods demanded. O The decrease in the price level, all else equal, makes the interest rate increase, increasing the amount of investment spending and the quantity of aggregate goods demanded The decrease in the price level, all else equal, decreases of aggregate goods demanded. The increase in the price level, all else equal, makes the interest rate increase, decreasing the amount of investment spending and the quantity of aggregate goods demanded AD 0 2 4 6 8 10 12 14 16 18 20 Real GOP (tillions of S) The Select answer effect explains the answer above. international interest rate wealth Hint O Previous O Check Answer NextExit!Explanation / Answer
1. Correct option: (a)
Reason: Under this effect, as price falls, exports become cheaper and imports become expensive. As a result, demand for foreign goods falls while that of domestic goods increases, thereby increasing AD and giving AD a downward slope.
2. international effect
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