The aggregate demand curve slopes downward because:
A) a higher price will increase investment.
B) a higher price level will cause an increase in expected income.
C) a higher price level will increase purchasing power.
D) a higher price level that foreigners must pay will increase exports.
E) a higher price level for future purchases reduces wealth.

Question

Quizplus · Accepted Answer

A higher price level reduces the real wealth of consumers, leading to decreased consumption and thus a downward-sloping aggregate demand curve.

The Aggregate Demand Curve Slopes Downward Because