Social Sciences and History / Unit 15 SSH 1408 short lesson, about 20 seconds
Three Reasons AD Slopes Down
Captions available
The idea
Three reasons AD slopes down. The wealth effect: a higher price level cuts real wealth, so consumption. The interest rate effect: a higher price level raises money demand, interest rates up, investment down. The foreign price effect: a higher price level makes domestic goods dearer, so fewer exports, more imports.
In practice
Three effects.
Where people slip
Not the micro law of demand.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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