Question

why does aggregate demand slopes downward according to interest rate effect ?
​

Answer 1

Answer:

The aggregate demand curve represents the total of consumption, investment, government purchases, and net exports at each price level in any period. It slopes downward because of the wealth effect on consumption, the interest rate effect on investment, and the international trade effect on net exports.

Answer 2

Explanation:

The aggregate demand curve represents the total of consumption, investment, government purchases, and net exports at each price level in any period. It slopes downward because of the wealth effecton consumption, the interest rate effecton investment, and the international trade effect on net exports.

As the price level increases the real value of cash balances decreases and total expenditures fall. ... There has been an 8 percent increase in the quantity of money in circulation that has shifted the AD curve