Economics (AS & A Level) · May / June 2024 · Paper 11 · Question 19
9708Aggregate Demand and Aggregate Supply analysis
Why would a fall in a country's average price level cause its aggregate demand curve to slope downwards?
- AIt leads to an increase in interest rates.
- BIt reduces the real value of money balances.
- CIt makes the country’s goods cheaper relative to foreign goods.
- DIt leads to the expectation of further price falls.
As printed in the paper
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Correct answer: C. It makes the country’s goods cheaper relative to foreign goods.
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