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8 February, 13:57

One of the reasons why the AD curve slopes downward is that as theA. Price level rises, purchasing power rises. B. Price level falls, purchasing power rises. C. Nation's income level rises, purchasing power rises. D. Nation's income level rises, purchasing power falls. E. This is a trick question, because the curve is upward sloping.

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  1. 8 February, 14:17
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    Answer: Option (B) is correct.

    Explanation:

    If the price of a commodity decreases, as a result purchasing power of a consumer increases. This is one of the reasons why the AD curve slopes downward.

    Suppose there is a fall in the price of a commodity, this will increase the demand for that commodity as well as the purchasing power of the consumer.

    Because with a lower price of the commodity, individuals can buy more quantity of goods with the same level of income.
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Home » Business » One of the reasons why the AD curve slopes downward is that as theA. Price level rises, purchasing power rises. B. Price level falls, purchasing power rises. C. Nation's income level rises, purchasing power rises. D.
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