Which of the following statements is false?
A) Purchasing power and the price level are inversely related.
B) The real balance effect refers to the change in the purchasing power of dollar-denominated assets as a result of a change in the price level.
C) The aggregate demand curve slopes downward because of the real balance,interest rate,and international trade effects.
D) A change in the quantity demanded of Real GDP is directly brought about by a change in interest rates.

Question

Quizplus · Accepted Answer

A change in interest rates affects the demand for Real GDP through the interest rate effect, but it does not directly bring about a change in the quantity demanded of Real GDP. Other factors such as consumption, investment, government spending, and net exports also contribute to changes in Real GDP.

Which of the Following Statements Is False