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Why is the AD curve downward sloping?

Im aware an increase in prices leads to a decrease in AD, but please explain WHY

3 Answers

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  • Anonymous
    7 years ago

    On the contrary of the individual market which is supposed to be a normal good, aggregate demand slope is based on IS-LM movement, or equilibrium both in the real and financial market. So it follows mainly the relation between interest rate and real income.

  • Anonymous
    7 years ago

    because of inverse relationship between price and demand

  • ?
    Lv 7
    7 years ago

    Because all goods are assumed normal.

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