Questions: Multiple Choice Question Aggregate demand is: horizontal. downward sloping. upward sloping. vertical.

The answer is downward sloping.

Aggregate demand is not horizontal. A horizontal line would imply that the quantity of goods and services demanded does not change with changes in the price level, which is not the case for aggregate demand.

Aggregate demand is downward sloping. This is because, as the price level decreases, the purchasing power of money increases, leading to higher consumption and investment, and thus a higher quantity of goods and services demanded. Additionally, lower price levels can make domestic goods more competitive internationally, increasing exports.

Aggregate demand is not upward sloping. An upward sloping curve would suggest that as prices rise, the quantity of goods and services demanded also rises, which contradicts the typical behavior of consumers and businesses.

Aggregate demand is not vertical. A vertical line would imply that the quantity of goods and services demanded is completely unresponsive to changes in the price level, which is not the case in the short run.