Question

Aggregate demand curve is

• A. Downward sloping
• B. Upward sloping
• C. both (A) and (B)
• D. None of these

Hint:

The aggregate demand curve slopes downward due to the inverse relationship between the price level and the quantity of goods and services demanded.

Answer 1

The Correct Option is A

Step 1: Understanding Aggregate Demand Curve:
The aggregate demand curve shows the total quantity of goods and services demanded in an economy at different price levels. Typically, the aggregate demand curve is downward sloping, meaning that as the price level decreases, the quantity of goods and services demanded increases. This negative relationship exists due to the wealth effect, interest rate effect, and exchange rate effect. Step 2: Analyzing the Options:
- Option (A): The aggregate demand curve is typically downward sloping, meaning that when the price level decreases, the demand for goods and services increases.
- Option (B): An upward sloping aggregate demand curve is not typical, as it does not represent the usual inverse relationship between price levels and quantity demanded.
- Option (C): While both (A) and (B) are presented, the correct characteristic of the aggregate demand curve is downward sloping.
- Option (D): This is incorrect, as the aggregate demand curve is generally downward sloping. Step 3: Conclusion:
The correct answer is option (A), as the aggregate demand curve is typically downward sloping.