Which of the following is not a response that would result from a decrease in the price level and so help to explain the slope of the aggregate demand curve?
A)When interest rates fall, Sleepwell Hotels decides to build some new hotels.
B)The exchange rate falls, so French restaurants in Paris buy more Iowa pork.
C)Janet feels wealthier because of the price drop and so she decides to remodel her bathroom.
D)With prices down and wages fixed by contract, Millio's Frozen Pizzas decides to lay off workers.

Question

Quizplus · Accepted Answer

This response contradicts the standard downward sloping aggregate demand curve, as it implies a decrease in aggregate demand due to decreased employment and income.

Which of the Following Is Not a Response That Would