Changes in the interest rate Shift aggregate demand if they are cause by fiscal or monetary policy, but not if they are caused by changes in price level. Option C
The supply and demand of credit affect interest rate levels; higher or lower levels of demand for credit will result in higher or lower interest rates, respectively.
To maintain stability and liquidity in the economy, central banks adjust short-term interest rates upward or downward. The demand for 10- and 30-year U.S. Treasury notes has an impact on long-term interest rates. Rates are managed by retail banks based on the market, their operational requirements, and specific clientele.
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