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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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Debt Service fund is a term that is used to describes a form of cash reserve utilized in the payment of interest and principal on specific kinds of debt for a given period. For example, bond premiums are commonly imposed by state law to be moved to debt service funds.

Hence, If taxes are levied specifically for payment of interest and principal on long-term debt, those taxes are: Recognized as revenues in the debt service fund.

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