Cost of borrowing to purchase goods and services increases

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In deriving AD, when the cost of borrowing to purchase goods and services increases, the quantity demanded for those goods and services will generally decrease. This is a description of the interest rate effect to explain aggregate demand's negative slope interest rate effect to explain aggregate demand's positive slope cause of shifts in the aggregate demand model impact of people's real wealth on aggregate demand substitution effect explanation for the overstatement of inflation.

Reference no: EM133637637

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Cost of borrowing to purchase goods and services increases : When the cost of borrowing to purchase goods and services increases, the quantity demanded for those goods and services will generally decrease.

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