Question

Explain why aggregate demand curve is negatively sloped by taking the link between the goods market and money market.

Answer 1

Aggregate demand is that demand which represents the total demand of the household sector, industrial sector and government sector in the economy.
The aggregate demand curve is negatively sloped because there is an inverse relationship between the aggregate demand curve and the relative factor this is the only reason why in the goods market and in the money market there is an inverse relationship between aggregate demand and the factors which are responsible for the creation of aggregate demand in the economy.
Aggregate demand is the total demand of the economy and therefore when there is a rise in the price of the commodity then household sector demanded fewer goods and if there is a fall in the price of the commodity then household sector demanded more goods in the economy therefore because of an inverse relationship between aggregate demand and the price the demand curve is negatively sloped India economy.
In the case of money market, the demand for money depends on the rate of interest charged by the banks and other financial institutes when the rate of interest is less than the demand for money is high and when the rate of interest is high then the demand for money is low this is the basic reason why aggregate demand is negatively sloped in the economy.