The aggregate demand curve generally slopes downward and to the right because, for any given money supply M a higher price level P causes a real money supply M/P, which the interest rate and __ spending.

The relationship between the amount of total spending in the economy and the price level for products is depicted by the aggregate demand curve's downward slope.

Aggregate demand includes all four components of demand:

Consumption
Investment
Government spending
Net exports = exports - imports

There are 3 effects of diminshing aggregate demand includes:

The wealth effect
The interest rate effect
The Foreign price effect

Although the amount of aggregate demand changes relatively little as a result of changes in price level, the steep slope suggests that a higher price level for final outputs does diminish aggregate demand for all three of these causes.

Hence, the aggregate demand curve generally slopes downward and to the right because, for any given money supply M a higher price level P causes a lower real money supply M/P, which raises the interest rate and reduces spending.

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The aggregate demand curve generally slopes downward and to the right because, for any given money supply M a higher price level P causes a ______ real money supply M/P, which ______ the interest rate and ______ spending.

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The aggregate demand curve generally slopes downward and to the right because, for any given money supply M a higher price level P causes a real money supply M/P, which the interest rate and __ spending.