GENERAL KNOWLEDGE

Detailed explanation-1: -Normally the demand curve slopes downwards as it indicates inverse relationship between price and quantity demand. Demand curve projects that when the price rises, the quantity demanded falls, and when the price falls, the demand rises.

Detailed explanation-2: -There are at least three accepted explanations of why demand curves slope downwards: The law of diminishing marginal utility. The income effect. The substitution effect.

Detailed explanation-3: -Demand curves take the shape of a straight (linear) line or curve (nonlinear). A linear demand curve typically slopes downward as it moves to the right, demonstrating the inverse relationship between the quantity of products demanded (x-axis) and its price (on the y-axis) at a particular point in time.

Detailed explanation-4: -The value of the slope of a normal demand curve is Negative. As the Price decreases, while the Quantity increases, the slope of Demand curve is usually negative. It is to be noted that in the case of a straight-line demand curve the slope is the same on all its points.

Detailed explanation-5: -There are three basic reasons for the downward sloping aggregate demand curve. These are Pigou’s wealth effect, Keynes’s interest-rate effect, and Mundell-Fleming’s exchange-rate effect. These three reasons for the downward sloping aggregate demand curve are distinct, yet they work together.