One reason why the aggregate demand (AD)curve slopes downward is that
A)increases in the price level cause consumers to substitute foreign goods for domestic goods.
B)when the price level falls firms must compete more when output increases.
C)increased production results in lower production costs.
D)when the price level falls consumers increase their saving rate.
E)aggregate expenditure increases as the price level rises.

Question

Quizplus · Accepted Answer

When the domestic price level rises, domestic goods become relatively more expensive compared to foreign goods, leading consumers to substitute foreign goods for domestic goods, which decreases aggregate demand.

One Reason Why the Aggregate Demand (AD)curve Slopes Downward Is