The aggregate demand curve shows that,if other factors are held constant,
A)higher price levels will result in lower real output demanded by the economy.
B)higher price levels will result in higher real output demanded by the economy.
C)higher price levels will result in lower interest rates.
D)lower price levels will result in inflationary conditions.

Question

Quizplus · Accepted Answer

The aggregate demand curve has a downward slope, indicating that as the price level increases, the quantity demanded of real GDP decreases. This is due to the inverse relationship between the price level and the components of aggregate demand, such as consumption, investment, and exports. As the price level increases, consumers and firms become less willing to spend, leading to a contraction in output and employment. Therefore, choice A is the correct answer.

The Aggregate Demand Curve Shows That,if Other Factors Are Held