Q 4

The best explanation of why the aggregate demand curve has a negative slope is that A) at a higher price level households cut back on their spending on goods and services. B) at a higher price level business firms wish to produce more goods and services. C) a higher price level results in lower real money balances and a higher real interest rate. D) a higher price level results in less government spending on transfers, such as unemployment insurance and social security payments.

Multiple Choice