One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises,
A) firms produce fewer goods and services.
B) people substitute toward more imported goods and services.
C) peoples' wealth increases.
D) firms produce more goods and services.

Question

Quizplus · Accepted Answer

When the domestic price level rises, people will tend to substitute toward more imported goods and services that are relatively cheaper. This leads to a decrease in the demand for domestic goods and services and results in a negative slope for the aggregate demand curve.

One Reason That the Aggregate Demand Curve Has a Negative