Question

The wealth effect is reflected by ______. Multiple choice question. the downward slope of the aggregate demand curve the upward slope of the aggregate demand curve a rightward shift of the aggregate demand curve the increases in interest rate to savers

Answer 1

The wealth effect is reflected by

- **the upward slope of the aggregate demand curve**


The wealth effect suggests that as people's wealth increases (e.g., due to rising asset prices like homes or stocks), they tend to spend more, leading to an increase in aggregate demand. This is typically represented as an upward-sloping aggregate demand curve in macroeconomics.