Question

An economics student makes the following statement: "It's easy to understand why the aggregatedemand curve is downward sloping: When the price level increases, consumers substitute into less expensive products, thereby decreasing total spending in the economy." This statement is false because the aggregate demand curve isa.downward sloping because as prices rise, consumer real wealth declines, interest rates rise, and exports become more expensive

Answer 1

Answer:

True

Explanation:

Indeed, the economics student was mistaken because aggregate demand follows a pattern that when prices rise, consumer wealth declines, the interest rates rise, and exports become more expensive thus leading to a downward sloping of the aggregate demand curve.

Therefore, the second statement is correct (True) for saying the economics student was wrong in his statement.