Why Do Demand Curves Slope Downward. Another reason why the demand curve slopes downwards are the rate of the interest rates. With a fall in the price of the commodity, and the price of its substitutes remaining the same, the consumer will buy more units of that commodity.
Why does the money demand curve slope downward? With a fall in the price of the commodity, and the price of its substitutes remaining the same, the consumer will buy more units of that commodity. The demand curve slopes downwards because more goods are purchased in response to fall in price.
If substitution effect outweighs income effect, the slope of curve will be positive, however, in the opposite case. One reason for this is that as the price of a commodity falls, people who were previously unable to buy it will enter the market and the amount of the commodity demanded will rise. Thirdly, a normal demand curve slopes downward because of variations in tastes and preferences of people.
The is curve is downward sloping because as the interest rate falls. Hence, because of the inverse relationship between price and quantity demanded, the demand curve slope downward. The demand curve slopes downwards because more goods are purchased in response to fall in price.
However, it is important to understand the reasons why the demand curve slopes. People differ in their requirements, desires, tastes and preferences. Thus, the above example makes it clear that it is not that all the demand curves will fall downward.
The negative slope of a demand curve is a reflection of the law of demand. There are three different reasons for the aggregate demand curve. Why does the money demand curve slope downward?
When at a lower price, there is a greater demand for a commodity by the households, the demand curve is bound to slope downward from left to right. Why does demand curve slope downward? Increase in demand for exports.
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