Why does the aggregate demand curve slope downward?
A) because, at a higher price level, fewer goods and services are available
B) because the periods when the price level is rising are usually times of swift declines in economic activity
C) because households feel poorer when average prices increase
D) because if the Canadian price level rises, foreigners will buy more Canadian goods, leaving fewer Canadian goods for domestic consumers

Question

Why does the aggregate demand curve slope downward?  
A) because, at a higher price level, fewer goods and services are available 
B) because the periods when the price level is rising are usually times of swift declines in economic activity 
C) because households feel poorer when average prices increase 
D) because if the Canadian price level rises, foreigners will buy more Canadian goods, leaving fewer Canadian goods for domestic consumers

Quizplus · Accepted Answer

When the overall price level rises, the purchasing power of consumers decreases, making them feel poorer. As a result, they reduce their consumption, reducing the overall demand for goods and services. Therefore, the aggregate demand curve slopes downward.

Why Does the Aggregate Demand Curve Slope Downward