The aggregate demand curve slopes downward because
A) as price rises,consumers substitute cheaper goods for more expensive goods.
B) all demand curves slope downward.
C) a higher price level increases purchasing power.
D) a higher price level increases exports.
E) a higher price level reduces wealth.

Question

Quizplus · Accepted Answer

A higher price level reduces wealth, resulting in consumers having less purchasing power, which decreases their willingness and ability to buy goods and services. This leads to a decrease in aggregate demand, causing the aggregate demand curve to slope downward.

The Aggregate Demand Curve Slopes Downward Because