The aggregate demand curve slopes downward because of
A) the multiplier.
B) the MPC.
C) wealth and substitution effects.
D) import and taxation effects.

Question

Quizplus · Accepted Answer

The aggregate demand curve slopes downward primarily due to the wealth effect (where people feel wealthier when prices fall and thus spend more) and the substitution effect (where consumers and businesses substitute towards cheaper goods and services as prices fall).

The Aggregate Demand Curve Slopes Downward Because of