One of the reasons why the aggregate demand (AD)curve slopes downward is that
A)aggregate expenditure increases as the price level rises.
B)decreases in the price level cause increases in private-sector wealth which lead to increases in desired consumption.
C)increased production results in lower production costs.
D)when the price level falls firms must be more competitive when output increases.
E)when the price level falls consumers increase their saving rate.

Question

Quizplus · Accepted Answer

A decrease in the price level increases the real value of money, which increases private-sector wealth and leads to higher consumption, contributing to the downward slope of the AD curve.

One of the Reasons Why the Aggregate Demand (AD)curve Slopes