Why does
the aggregate demand curve slope downward? Give at least three reasons and
examples....

Question

Why does
the aggregate demand curve slope downward? Give at least three reasons and
examples. Identify an event that would shift the AD curve and which direction
the AD curve will shift.

David · Accepted Answer

The aggregate demand curve shows the relationship between aggregate price level and aggregate output level of the economy
Why does the aggregate demand curve slope downward? Give at least three reasons and examples. Identify an event that would shift the AD curve and which direction the AD curve will shift.
The aggregate demand curve shows the relationship between aggregate price level and aggregate output level of the economy. 
The aggregate demand curve is downward sloping because of the following 3 reasons:
a) Wealth effect: as price level increases, consumers’ real wealth, decreases, causing decrease in their purchasing power. As a result,

Why does the aggregate demand curve slope downward? Give at least three reasons and examples. Identify an event that would shift the AD curve and which direction the AD curve will shift.

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