Use the money market to explain the interest-rate effect and its relation to the slope of the aggregate demand curve
When the price level falls, people need less money for their transactions. The decreased demand for money leads to a decrease in interest rates as money demand shifts left. Lower interest rates encourage consumption and investment spending. Thus, a decrease in the price level raises the aggregate quantity of goods and services demanded.
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In the early 1980's the Fed tightened monetary policy. Over the next few years
a. inflation remained high and unemployment rose. b. inflation fell but unemployment rose temporarily. c. inflation and unemployment fell. d. inflation and unemployment rose.
Foreign citizens have been increasing their ownership of U.S. assets. This contributes to a U.S.
a. deficit on current account. b. deficit on financial account. c. surplus on current account. d. surplus on financial account.