The aggregate demand curve is downward-sloping partly due to the _______ relationship between the price level and _______.
A) positive; net exports
B) negative; net exports
C) positive; government spending
D) negative; government spending

Question

Quizplus · Accepted Answer

The downward slope of the aggregate demand curve reflects the inverse relationship between the price level and overall spending in the economy, including net exports. As the price level rises, the quantity of aggregate demand (total spending) decreases because of the decrease in real wealth, increase in interest rates, and decrease in net exports. Therefore, option B is the best choice.

The Aggregate Demand Curve Is Downward-Sloping Partly Due to the _______