Discuss the reasons why the aggregate demand (AD) curve slopes downward. Week 2 Discussio
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Discuss the reasons why the aggregate demand (AD) curve slopes downward. Week 2 Discussion 2 Discuss the reasons why the aggregate demand (AD) curve slopes downward. As defined by Amacher and Pate (2019) “Aggregate demand is just that, the combined set of all goods and services produced in an economy and the average prices of those goods and services.†The downward slope shows how people tend to buy more when the price is lower. So, when the price of an object is lower the consumer will purchase multiple. We tend to associate the price to whether something is a bargain. If the price is high, we will be reluctant to purchase more than one if we purchase at all. But if the price is lower and we feel that we are getting a bargain, people tend to purchase in quantity so as to stock up for future use. What causes the AD curve and aggregate supply (AS) curve to shift, respectively? Supply and demand cause the AD curve and AS curve to shift to the right/left or up/down. So, if quantity demands increase and supply remains the same a shortage happens. This leads to a higher price and demand is high. Now if quantity demands decrease and supply remains the same a surplus happens. This leads to lower price because the demand is lower. When the price is lower the population will tend to purchase more and the curve will move. As goes for when the price is higher, the population tend to not purchase as much, and the curve will swing the other way. How would a change in AD and AS affect the economy, respectively? The change in AD and AS cur
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