One Explanation for the Negative Slope of the Aggregate Demand

question 11

Multiple Choice

One explanation for the negative slope of the aggregate demand curve is that

• A)as prices rise,nominal income falls and so does the demand for real goods and services
• B)falling prices make people feel poorer and reduce spending
• C)as prices rise,government spends less to drive the price level back down
• D)businesses increase spending when inflation is high and rising
• E)as prices rise,domestic goods become more expensive relative to foreign goods,which reduces exports

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