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

Question

Quizplus · Accepted Answer

When the domestic price level rises, people tend to buy more foreign goods because they become relatively cheaper than domestic products. This leads to a decrease in domestic demand and a shift of some of the demand to foreign countries, resulting in a negative sloping aggregate demand curve.

One Reason That the Aggregate Demand Curve Has a Negative