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cricket20 [7]
3 years ago
5

An increase in interest rates affects aggregate demand by A. shifting the aggregate demand curve to the​ left, reducing real GDP

and lowering the price level. B. shifting the aggregate demand curve to the​ right, increasing real GDP and lowering the price level. C. shifting the aggregate supply curve to the​ left, decreasing real GDP and increasing the price level. D. shifting the aggregate supply curve to the​ right, increasing real GDP and lowering the price level.
Business
1 answer:
Sergio039 [100]3 years ago
7 0

Answer: B. shifting the aggregate demand curve to the​ right, increasing real GDP and lowering the price level.

Explanation: A low interest rate increases the demand for investment as the cost of investment falls with the interest rate. Thus, a drop in the price level decreases the interest rate, which increases the demand for investment and thereby increases aggregate demand.

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