Question

If the price level is constant, but consumption increases, then the real balance effect will a. cause the AD curve to shift rightward. b. cause the AD curve to shift leftward. c. not have any effect on the position of the AD curve. d. will have some effect on the AD curve, but we cannot predict that effect.

Answer 1

Answer: C.

Step-by-step explanation:

This is because it has effect on price and balance effect, and the reason why AD does not have a positive slope is basically because of foreign trade.