The Aggregate Demand Curve Is Downward Sloping Because

question 123

Multiple Choice

The aggregate demand curve is downward sloping because:

• A) an increase in the price level will cause an increase in spending.
• B) at lower price levels, real wealth decreases, causing a decrease in the quantities of goods and services demanded.
• C) at lower price levels, interest rates decrease, causing a decrease in the quantities of goods and services demanded.
• D) at lower price levels, exports increase, causing an increase in real GDP.
• E) increases in the price level do not affect people's real wealth.

---

Definitions:

Psychological Energy

A theoretical concept referring to the use of mental resources or drive to perform tasks, involving processes like motivation, attention, and effort.

Ego

In Freudian theory, the mental structure that develops out of the id as the infant is forced by reality to cope with the social world. The ego mediates between the id and the social world, allowing children to control and regulate behavior.

Superego

In Freudian terms, the conscience. It represents the authority of the child’s parents and sits in stern judgement of the ego’s efforts to hold the id in check. It becomes a major force in the personality in middle childhood.

Ego

In Freudian theory, the part of the psyche that mediates between the demands of the id, the superego, and reality, playing a key role in managing self-identity and consciousness.