One Reason That the Aggregate Demand Curve Has a Negative

question 12

Multiple Choice

One reason that the aggregate demand curve has a negative slope is because

• A) people buy fewer goods and save more when the price level rises because their real wealth decreases.
• B) firms produce more when the price rises.
• C) people earn more money when output rises.
• D) The premise of the question is wrong because the aggregate demand curve has a positive slope.

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Definitions:

Long Lived Asset

An asset that is expected to provide economic benefits over a prolonged period, typically over one year, such as buildings, machinery, and equipment.

Service Life

Service life is the expected period during which an asset remains useful and operational for its intended purpose.

Machinery

Refers to machines, equipment, and devices that perform various tasks on a larger scale or operate in a system designed for a specific application.

Bad Debt Reserve

Also known as the allowance for doubtful accounts, it represents funds set aside to account for projected losses from unpaid customer debts.