One reason that the aggregate demand curve has a negative slope is because
A) people earn more money when output rises.
B) people buy fewer goods and save more when the price level rises because their real wealth decreases.
C) firms produce more when the price rises.
D) The premise of the question is wrong because the aggregate demand curve has a positive slope.

Question

Quizplus · Accepted Answer

When the price level rises, the purchasing power of individuals decreases, reducing their real wealth. As a result, they tend to save more and buy fewer goods, leading to a decrease in aggregate demand. This inverse relationship between the price level and aggregate demand creates a negative slope in the aggregate demand curve.

One Reason That the Aggregate Demand Curve Has a Negative