What is the main reason the aggregate demand curve slopes downward?
A)As the price level increases, interest rates increase, and investment decreases.
B)As the price level increases, interest rates decrease, and investment increases.
C)As the price level decreases, interest rates increase, and investment increases.
D)As the price level decreases, interest rates decrease, and investment decreases.

Question

Quizplus · Accepted Answer

The main reason the aggregate demand curve slopes downward is that as the price level increases, interest rates increase, and investment decreases. This happens because consumers and businesses have less money to spend due to the higher cost of borrowing and goods, leading to a decrease in demand. Therefore, the aggregate demand curve slopes downward to represent the inverse relationship between price level and quantity demanded.

What Is the Main Reason the Aggregate Demand Curve Slopes