The downward-sloping aggregate demand curve is partly due to:
A)the positive relationship between the price level and net exports.
B)the negative relationship between the price level and net exports.
C)the positive relationship between the price level and government spending.
D)the negative relationship between the price level and government spending.

Question

Quizplus · Accepted Answer

According to the theory of aggregate demand, as the price level increases, the quantity demanded of goods and services in an economy decreases (known as the wealth effect) and the demand for exports decreases, leading to a negative relationship between the price level and net exports. This is a significant reason for the downward-sloping aggregate demand curve.

The Downward-Sloping Aggregate Demand Curve Is Partly Due To