With the price level measured on the vertical axis and output measured on the horizontal axis, the aggregate-demand curve
A)is vertical.
B)is downward-sloping.
C)is horizontal.
D)is upward-sloping.

Question

Quizplus · Accepted Answer

The aggregate-demand curve is downward-sloping because as prices increase, consumers and firms will reduce their spending, leading to lower output. On the other hand, as prices decrease, spending will increase, leading to higher output. Therefore, the aggregate-demand curve slopes downwards from left to right.

With the Price Level Measured on the Vertical Axis and Output