According to the IS-LM/AS-AD model, the AD curve is downward sloping because O as the aggregate price level increases th

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According To The Is Lm As Ad Model The Ad Curve Is Downward Sloping Because O As The Aggregate Price Level Increases Th 1 (12.94 KiB) Viewed 14 times

According to the IS-LM/AS-AD model, the AD curve is downward sloping because O as the aggregate price level increases the real money supply decreases, causing the real interest rate to rise. Whenever the real interest rate rises, the quantity of aggregate demand for consumption and investment falls Ⓒ as the aggregate price level increases, the mal wage rate will also rise and employment decreases, causing the FE curve to shift to the left. O as the aggregate price level increases, the real wage rate falls and employment increases, causing the FE curve to shift to the right O as the aggregate price level increases, the real money supply increases, decreasing the real interest rate. Whenever the real interest rate falls, the quantity of aggregte demand for consumption and investment rises.