The substitution effect, based on relative commodity price changes, represents one reason for the downward slope of the aggregate demand curve.

Question

Quizplus · Accepted Answer

The substitution effect explains the downward slope of the demand curve for individual goods based on relative price changes, not the aggregate demand curve, which is influenced by factors like income levels, expectations, and changes in the prices of all goods and services.

The Substitution Effect, Based on Relative Commodity Price Changes, Represents