Wealth and substitution effects explain why the aggregate demand curve has a positive slope.

Name: Wealth and substitution effects explain why the aggregate demand curve has a positive slope.
Brand: Quizplus
Rating: 4.9 (35 reviews)

Question

Quizplus · Accepted Answer

The aggregate demand curve has a negative slope, not a positive one, because as the price level decreases, the quantity of goods and services demanded increases due to the wealth effect, interest rate effect, and the substitution effect.

Wealth and Substitution Effects Explain Why the Aggregate Demand Curve