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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

There is a difference between a change in the interest rate that is brought about by a change in the price level and a change in the interest rate that is brought about by a change in some factor other than the price level. The first will change the quantity demanded of Real GDP, and the second will change the AD curve. Do you agree or disagree with this statement? Explain your answer.

To determine

Explain the changes in the quantity demand of Real GDP and the AD curve.

Explanation

In an economy, the price levels are shown in the vertical axis, and the horizontal axis represents the Real GDP. If the price changes in the market by effect of change in interest rate, it leads to changes in the purchasing power in the market...

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