One reason that the aggregate demand curve has a negative slope is that when the domestic price level rises,
A) firms produce more goods and services.
B) peoplesʹ wealth increases.
C) firms produce fewer goods and services.
D) people substitute toward more imported goods and services.

Question

Quizplus · Accepted Answer

When the domestic price level rises, people tend to substitute toward more imported goods and services as they become relatively cheaper compared to domestically produced goods. This results in a decrease in the quantity demanded of domestically produced goods and services, causing a downward shift in the aggregate demand curve.

One Reason That the Aggregate Demand Curve Has a Negative