In the dynamic model, the demand for goods and services decreases as the natural level of output or the real rate of interest .
A)increases; increases
B)increases; decreases
C)decreases; decreases
D)decreases; increases

Question

Quizplus · Accepted Answer

According to the dynamic model, an increase in the natural level of output or real rate of interest leads to a decrease in demand for goods and services, as higher output and interest rates result in lower investment and consumption spending by households and businesses. Therefore, the correct option is D, which shows that the demand for goods and services decreases as the natural level of output or the real rate of interest increases.

In the Dynamic Model, the Demand for Goods and Services