All of the following explain the downward slope of the aggregate demand curve EXCEPT
A) changes in the stock of real wealth held by individuals.
B) the effect of changing interest rates on the quantity demanded of interest-rate-sensitive goods.
C) the availability of foreign substitute goods.
D) the presence of unused production capacity and unemployment.

Question

Quizplus · Accepted Answer

The downward slope of the aggregate demand curve is primarily explained by the wealth effect, the interest rate effect, and the substitution effect (related to foreign goods). The presence of unused production capacity and unemployment does not explain the slope of the aggregate demand curve; instead, it is related to the aggregate supply side of the economy.

All of the Following Explain the Downward Slope of the Aggregate