Question: State whether the following argument is correct or not, and explain the reasons. 5. An aggregate demand curve is downward sloping against prices because price

State whether the following argument is correct or not, and explain the reasons.

5. An aggregate demand curve is downward sloping against prices because price increaseseffectivelyreducetherealmoneysupplyandtherebyincrease interest rates, lower investment, and cause GDP to contract.

6. Both monetary policy and fiscal policy are ineffective in the long run, because neither can influence the determinants of potential GDP.

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