Question

Hello - I need assistance with this homework question, please.

The aggregate demand curve is downward sloping because:

	a.	?buyers tend to purchase those goods that have a unit elasticity.
	b.	?buyers tend to purchase more of inferior goods as price levels increase.
	c.	?buyers tend to purchase more of all goods and services as the opportunity costs of producing those goods increase.
	d.	?buyers tend to purchase more of all goods and services as price levels decrease.

Answer 1

The AD Curve is downward sloping because buyers tend to purchase more of all goods as price level decreases. Firstly, a lower price level means a higher purchasing power and a higher level of disposable income which acts accordingly to increase the output demanded which defines the downward slope of the AD Curve.

Secondly at a lower price level, the demand for exports are higher which tends a country to increase its exports and simultaneously increase the amount of output.