Which of the following effects helps to explain the slope of the aggregate-demand curve?
A)the exchange-rate effect
B)the wealth effect
C)the interest-rate effect
D)All of the above are correct.

Question

Quizplus · Accepted Answer

All three effects (exchange-rate effect, wealth effect, interest-rate effect) impact the relationship between the aggregate price level and the quantity of aggregate output demanded. The exchange-rate effect influences net exports, the wealth effect impacts consumption, and the interest-rate effect affects investment. All three effects contribute to the downward slope of the aggregate-demand curve.

Which of the Following Effects Helps to Explain the Slope