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From class and your textbook, you learned why the aggregate demand curve slopes downward, like the one shown below. Price level {P} AD Real IIiDP

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From class and your textbook, you learned why the aggregate demand curve slopes downward, like the one shown below. Price level {P} AD Real IIiDP [billions of dollars) The next three questions ask you to explain why there is a negative relationship between the price level and real GDP. When the price level falls, household real wealth will quantity of aggregate demand will " Part 2 (3 points) If the price level falls. people will save v investment spending. Part 3 (2 points) If the price level in the United States decreases relative to the price level in other countries. net exports will quantity of aggregate demand will ' , and the interest rate will . Firms, therefore, will v and consumption spending will If .Therefore. the O See Hint 0 See Hint .and the

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