The aggregate demand curve slopes downward to the right,reflecting a relationship between the price level and
A)real GDP
B)interest rates
C)the saving rate
D)the investment level
E)the consumption level

Question

Quizplus · Accepted Answer

The aggregate demand (AD) curve represents the relationship between the price level and the level of real gross domestic product (GDP) demanded in the economy. As the price level increases, the quantity of real GDP demanded decreases, while as the price level falls, the quantity of real GDP demanded increases. This is because at higher price levels, firms are willing to produce less output due to higher costs, while consumers are willing to purchase less at higher prices. Therefore, the slope of the AD curve is negative or downward-sloping. The other choices (interest rates, saving rate, investment level, consumption level) are not directly related to the AD curve's slope.

The Aggregate Demand Curve Slopes Downward to the Right,reflecting a Relationship