Why Is the Aggregate Demand Curve Downward Sloping

question 79

Multiple Choice

Why is the aggregate demand curve downward sloping?  

• A) because, as prices fall, nominal income rises and so does the demand for real goods and services. 
• B) because rising prices reduce people's wealth, thereby reducing spending 
• C) because the government decides to spend less to increase the price level 
• D) because, as prices fall, domestically produced goods become more expensive relative to foreign-produced products, which increases production

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Definitions:

Liabilities

Financial obligations or debts a company owes to external parties that must be settled in the future.

Uncertain Timing

Refers to the ambiguity or unpredictability associated with the timing of an event or outcome, often affecting planning and decision-making processes.

Uncertain Amount

An Uncertain Amount refers to a value or quantity that is not fixed or precisely determined, often due to volatility or incomplete information.

Harmonized Sales Tax (HST)

A combined tax in some Canadian provinces that merges the federal goods and services tax (GST) with the provincial sales tax (PST) into a single value-added tax.