Why does the aggregate demand curve slope downward?
A) because when the price level increases, consumers feel poorer and therefore buy less
B) because when the price level increases, consumers feel richer and therefore buy more
C) because when domestic prices increase, consumers substitute domestic goods for imported ones
D) because when the price of a particular good increases, consumers substitute away from that good

Question

Why does the aggregate demand curve slope downward?  
A) because when the price level increases, consumers feel poorer and therefore buy less 
B) because when the price level increases, consumers feel richer and therefore buy more 
C) because when domestic prices increase, consumers substitute domestic goods for imported ones 
D) because when the price of a particular good increases, consumers substitute away from that good

Quizplus · Accepted Answer

When the price level increases, the purchasing power of consumer's income decreases. This makes consumers feel poorer and therefore buy less. As a result, the demand for goods and services decreases, causing the aggregate demand curve to slope downward.

Why Does the Aggregate Demand Curve Slope Downward