The US demand curve would shift to the left if the federal reserve board caused the real interest rate to increase, which means option C is the right answer.
The demand curve refers to the graphical representation of the relationship between the price of a goods or services and the quantity demanded for a given time duration. When the prices of any commodity increases, its demand decreases and vice versa. Hence, the demand curve would be a decreasing downward slope from left to right. A reduction in the interest rate increases the quantity of money demanded. Variations in demand curves are due to the following factors:
1. Changes in the prices of items
2. Changes in the demand and supply of any item
3. Change in population
4. Variability in the income of population
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