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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