In the aggregate demand-aggregate supply model, an increase in the price level will
a. increase money demand, raise the interest rate, reduce aggregate expenditure, and decrease equilibrium real GDP
b. decrease money demand, lower the interest rate, increase aggregate expenditure, and increase real GDP
c. increase the money supply, lower the interest rate, increase aggregate expenditure, and increase real GDP
d. decrease the money supply, raise the interest rate, reduce aggregate expenditure, and decrease real GDP
e. not change money supply, money demand or the interest rate, but will shift the aggregate demand curve to the right
A
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Which of the following shifts the aggregate demand curve rightward?
A) a decrease in government expenditure B) expectations that future incomes will fall C) a decrease in the quantity of money and an increase in interest rates D) a tax cut
In a market economy, ________ interact in markets to decide the answers to the fundamental economic questions
A) the judicial and legislative branches of the federal government B) large corporations C) households and firms D) state and local governments