Author Question: Substitution effects help explain the slope of the aggregate demand curve. One substitution effect ... (Read 75 times)

justinmsk · **on:** Jun 29, 2018

Substitution effects help explain the slope of the aggregate demand curve. One substitution effect refers to the

A) inverse relationship between the interest rate and the price level.
B) direct relationship between the interest rate and the real value of wealth.
C) effect on investment expenditures that result from a change in interest rates produced by a change in the price level.
D) change in wealth that results from a change in the interest rate.

Question 2

Suppose the exchange rate for the U.S. dollar rises. This could be caused by

A) an increase in U.S. import demand.
B) a decrease in the world demand for U.S. exports.
C) a fall in the expected future exchange rate.
D) an increase in the U.S. interest rate differential.