1215

Which of the following is NOT a reason that the aggregate demand curve slopes downward?

A) Because entitlements are adjusted for inflation, a rising price level forces government spending to increase.

B) The wealth effect causes consumers to spend less when the price level rises.

C) Business investment declines as a rising price level increases interest rates.

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The aggregate demand curve plots real GDP against the price level. Rising entitlement payments that result from an increasing price level affect nominal GDP, but not real GDP. Both remaining choices describe reasons why the consumption and investment components of real GDP decrease when the price level increases.