Answer to Question #236429 in Macroeconomics for KAT

Question

derived aggregate demand curve ? why it falls negatively ?

Answer 1

Aggregate demand curve displays inverse links between national income level and aggregate price level. When the nominal money supply is hold constant and price level rises, real money balances supply tends to fall. This makes the curve to shift upwards.

The Aggregate demand curve usually falls negatively considering the impact of the interest rate on investment, impact of international trade on the net exports as well as the impact of wealth on consumption.