The downward sloping aggregate demand curve can be explained in part through:
A)the positive relationship between the price level and net exports.
B)the positive relationship between the price level and consumption.
C)the negative relationship between the price level and investment spending.
D)All of these are true.

Question

Quizplus · Accepted Answer

The negative relationship between the price level and investment spending is one of the main factors that contributes to the downward sloping aggregate demand curve. As prices increase, firms may choose to reduce their investment spending, resulting in a decrease in aggregate demand. The other factors mentioned may also contribute to the downward sloping curve, but the negative relationship between prices and investment spending is the most closely related to the slope of the curve.

The Downward Sloping Aggregate Demand Curve Can Be Explained in Part