SLOPE, AGGREGATE DEMAND CURVE: The aggregate demand curve has a negative slope, reflecting the inverse relation between the price level and aggregate expenditures on real production. A higher price level is related to fewer aggregate expenditures and a lower price level is related to greater aggregate expenditures. The three reasons underlying the negative slope of the AD curve and the inverse relation between the price level and aggregate expenditures on real production are: real-balance effect; interest-rate effect; and net-export effect. See also | aggregate demand curve | slope | aggregate demand | price level | aggregate expenditures | real-balance effect | interest-rate effect | net-export effect | change in aggregate expenditures | change in aggregate demand | aggregate demand determinants | slope, long-run aggregate supply curve | slope, short-run aggregate supply curve |
