The aggregate demand curve is downward-sloping because,other things being equal:
A) People buy more goods and services at lower average incomes.
B) A lower average price level causes lower interest rates,which stimulate loan-financed purchases.
C) A higher average price level will induce producers to offer more output than otherwise.
D) People buy more goods and services at higher average prices.

Question

Quizplus · Accepted Answer

A lower average price level leads to lower interest rates, which in turn encourages more borrowing and spending on goods and services, thus explaining why the aggregate demand curve is downward-sloping.

The Aggregate Demand Curve Is Downward-Sloping Because,other Things Being Equal