One reason that the aggregate demand curve has a negative slope is because
A) the amount of money in the economy increases when the price level rises.
B) firms supply less when prices rise.
C) people buy more foreign goods when the domestic price level rises.
D) firms supply more when prices rise.

Question

Quizplus · Accepted Answer

When the domestic price level rises, foreign goods become relatively cheaper, so people tend to buy more of them. As a result, domestic demand for domestic goods and services decreases, causing the aggregate demand curve to slope downwards.

One Reason That the Aggregate Demand Curve Has a Negative