What is reflected by the aggregate demand curve's downward slope to the right?
A) a relationship between the price level and real GDP
B) a relationship between the price level and interest rates
C) a relationship between the price level and the saving rate
D) a relationship between the price level and the investment level

Question

What is reflected by the aggregate demand curve's downward slope to the right?  
A) a relationship between the price level and real GDP 
B) a relationship between the price level and interest rates 
C) a relationship between the price level and the saving rate 
D) a relationship between the price level and the investment level

Quizplus · Accepted Answer

The downward slope to the right of the aggregate demand curve reflects the relationship between the price level (on the vertical axis) and real GDP (on the horizontal axis), indicating that at higher price levels, there is less demand for goods and services, which results in a lower level of output. Conversely, at lower price levels, there is more demand for goods and services, which results in a higher level of output. This relationship is due to the inverse relationship between the price level and the quantity of goods and services demanded, known as the "wealth effect," "interest rate effect," and "international trade effect."

What Is Reflected by the Aggregate Demand Curve's Downward Slope