The AD curve slopes upward because the LM curve shifts left.

Question

Quizplus · Accepted Answer

The AD (Aggregate Demand) curve slopes downward, not upward, because as the price level decreases, the quantity of goods and services demanded increases, due to the wealth effect, interest rate effect, and international trade effect. The LM curve, part of the IS-LM model, represents equilibrium in the money market and its position or shift does not directly determine the slope of the AD curve.

The AD Curve Slopes Upward Because the LM Curve Shifts