One reason that the aggregate demand curve has a negative slope is because
A) people buy fewer goods and save more when the price level rises because their real wealth decreases.
B) firms produce more when the price rises.
C) people earn more money when output rises.
D) The premise of the question is wrong because the aggregate demand curve has a positive slope.

Question

Quizplus · Accepted Answer

The aggregate demand curve has a negative slope because as the price level rises, the purchasing power of consumers' wealth decreases, leading them to spend less on goods and services. This is known as the wealth effect.

One Reason That the Aggregate Demand Curve Has a Negative