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Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in shifts of the aggregate demand curve?
Chapter 12, Problem 1(choose chapter or problem)
Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in shifts of the aggregate demand curve?
Questions & Answers
QUESTION:
Why is the aggregate demand curve downsloping? Specify how your explanation differs from the explanation for the downsloping demand curve for a single product. What role does the multiplier play in shifts of the aggregate demand curve?
ANSWER:Step 1 of 2
The demand curve is downward sloping due to the fact that as the price of an object decreases, the demand for it enhances instantly. The negative relationship between the price and demand of objects determines the nature of the slope in the demand curve. This explains the single object demand curve.