The aggregate demand curve is
A) downward sloping.
B) upward sloping.
C) a vertical line at potential output.
D) a horizontal line at the current price level.

Question

Quizplus · Accepted Answer

The aggregate demand curve is downward sloping, which means that as the price level increases, the quantity of real GDP demanded decreases, and vice versa. This relationship between price level and quantity of real GDP demanded is based on the idea that at lower price levels, individuals and firms are more likely to spend or invest, leading to higher aggregate demand, and at higher price levels, individuals and firms are less likely to spend or invest, leading to lower aggregate demand.

The Aggregate Demand Curve Is