Check Your Understanding

1. Question

   Determine the effect on aggregate demand of each of the following events. Explain whether it represents a movement along the aggregate demand curve (up or down) or a shift of the curve (leftward or rightward).

   1. a rise in the interest rate caused by a change in monetary policy

   2. a fall in the real value of money in the economy due to a higher aggregate price level

   3. news of a worse-than-expected job market next year

   4. a fall in tax rates

   5. a rise in the real value of assets in the economy due to a lower aggregate price level

   6. a rise in the real value of assets in the economy due to a surge in real estate values