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Economics (AS & A Level) · May / June 2025 · Paper 12 · Question 18

9708Aggregate Demand and Aggregate Supply analysis

The aggregate demand curve is typically downward sloping. What is one possible explanation for this?

  1. AA fall in the price level will lead to a rise in demand for imports.
  2. BAs the price level falls, improved productivity will reduce unit costs.
  3. CIf the price level is high, any interest rate changes will encourage consumption.
  4. DThe real value of assets increases as the price level falls.

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Correct answer: D. The real value of assets increases as the price level falls.

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