Question

Changes in the price level of the different components of aggregate demand are reflected in the AD/ASAD/AS macroeconomic model by a ________________________.

Answer 1

Answer: Downward sloping AD curve

Explanation:

The downward sloping AD curve is basically refers to the aggregate demand curve in which the price level are get decreased and the total output quantity of the demand are get increased.

In the aggregate curve when the price of the products are get reduced then the national income are automatically get increased.

There are basically three reason behind the downward sloping AD curve are as follows:

• Effect of the Keynes's interest rate
• The Pigou wealth effect
• The mun-dell Fleming exchanging rate effect

Therefore, Downward sloping aggregate demand curve is the correct answer.