The downward-sloping aggregate demand curve is partly due to the:
A) positive relationship between the price level and net exports.
B) negative relationship between the price level and net exports.
C) positive relationship between the price level and government spending.
D) negative relationship between the price level and government spending.

Question

Quizplus · Accepted Answer

The negative relationship between the price level and net exports is due to the fact that when the price level in a country rises, its exports become relatively more expensive and its imports become relatively cheaper. This leads to a decrease in net exports, which shifts the aggregate demand curve downward.

The Downward-Sloping Aggregate Demand Curve Is Partly Due to The