Which of the following explains the downward slope of the aggregate demand curve?
A)As the Canadian price level increases, the dollar depreciates and people buy more imports.
B)As the Canadian price level increases, the interest rate falls and firms invest less.
C)As the Canadian price level increases, people feel less wealthy and buy less goods and services.
D)As the Canadian price level increases, people buy more substitute goods.

Question

Quizplus · Accepted Answer

As the Canadian price level increases, people feel less wealthy and buy less goods and services. This is because their purchasing power decreases as prices increase, leading to a decrease in overall demand.

Which of the Following Explains the Downward Slope of the Aggregate