Arrange the following steps in the correct order to illustrate the relationship between aggregate demand, interest rates, and bond prices: A) Increased aggregate demand raises money demand, B) Higher money demand leads to higher interest rates, C) Rising interest rates cause bond prices to fall, D) This sequence affects overall economic activity.

To understand how aggregate demand, interest rates, and bond prices are connected, we start with increased aggregate demand, which raises the demand for money to facilitate more spending. This higher demand for money leads to an increase in interest rates, as lenders want to encourage borrowing by offering higher returns. When interest rates rise, it causes bond prices to fall because existing bonds become less attractive compared to new bonds that offer higher rates. This chain of events ultimately affects overall economic activity, as higher interest rates can slow down borrowing and spending, impacting growth. For example, if a company wants to expand but faces higher borrowing costs due to rising interest rates, it might delay its investment, which can slow economic progress.