The aggregate demand curve slopes:
A) downward for the same reasons that an ordinary demand curve does.
B) downward in part because when the price level falls, the real wealth of the public falls, and this induces people to change their consumption.
C) downward in part because as the price level falls, the ability of households and firms to borrow cheaply increases.
D) upward, unlike an ordinary demand curve.

Question

Quizplus · Accepted Answer

The aggregate demand curve slopes downward partly because a lower price level increases the real wealth of the public, enhancing their ability to consume and borrow, which boosts overall demand.

The Aggregate Demand Curve Slopes