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Which of the following describes why the substitution effect is not a good explanation of why aggregate demand slopes negatively?

A

It implies higher interest rates causing muddy waters when interpreting aggregate demand.

B

There is no overall substitution effect for domestically produced goods due to price level decreases.

C

Increased substitution results in more demand not less.

D

Substitution occurs only in the consumption component of the formula and does not explain investment changes that occur.

E

Substitution occurs only in the government component of aggregate demand and does not explain investment decisions.

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