One Reason Why the Aggregate Demand (AD)curve Slopes Downward Is

question 57

Multiple Choice

One reason why the aggregate demand (AD) curve slopes downward is that

• A)increased production results in lower production costs.
• B)when the price level falls consumers increase their saving rate.
• C)aggregate expenditure increases as the price level rises.
• D)decreases in the price level cause increases in private- sector wealth which lead to increases in desired consumption.
• E)when the price level falls firms must compete more when output increases.

---

Definitions:

Marginal Product

The extra output or benefit received from using one additional unit of a resource.

Opportunity Cost

The cost of an alternative that must be forgone in order to pursue a certain action, the benefits you could have received by taking an alternative action.

Marginal Cost

The cost added by producing one more item of a product, a crucial factor in economic decision-making regarding production levels.

Economic Profit

The difference between a firm’s total revenues and its total costs, including both explicit and implicit costs, representing the actual financial gain.