Question

The aggregate demand curve is downward sloping because as the price level increases the purchasing power of wealth decreases purchasing power of wealth decreases A demand for imports decreases demand for imports decreases B demand for interest-sensitive expenditures increases demand for interest-sensitive expenditures increases C demand for domestically produced substitute goods increases demand for domestically produced substitute goods increases D real value of fixed assets increases

Answer 1

Answer:

A

Explanation:

The aggregate demand curve is a graph that represents the  total quantity of all goods and services demanded by the economy at different price levels.

The aggregate demand curve slopes downward because

• wealth effect on consumption
• the interest rate effect on investment
• the international trade effect on net exports.

If price level decreases, wealth decreases. As a result, import becomes more expensive and export decreases. This leads to a downward slope of the demand curve