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The AD (aggregate demand) curve in the static AD–AS model is downward sloping, reflecting a negative correlation between output and the price level on the demand side. It shows the combinations of the price level and level of the output at which the goods and assets markets are simultaneously in equilibrium.
Oligopolies generally rely on non-price weapons, such as advertising or changes in product characteristics. Several large companies hold large market shares in industrial production, each facing a downward sloping demand, and the industry is often characterized by extensive non-price competition.
Similarly, if the household expects the price of the commodity to decrease, it may postpone its purchases. Thus, some argue that the law of demand is violated in such cases. In this case, the demand curve does not slope down from left to right; instead, it presents a backward slope from the top right to down left.
Emerging market stocks have fallen 10% since October amid fears of a new trade war, but markets are still not fully pricing in the risks, UBS said.
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In economics, aggregate demand (AD) or domestic final demand (DFD) is the total demand for final goods and services in an economy at a given time. [1] It is often called effective demand , though at other times this term is distinguished.
The AD–AS model is a common textbook model for explaining the macroeconomy. [55] The original version of the model shows the price level and level of real output given the equilibrium in aggregate demand and aggregate supply. The aggregate demand curve's downward slope means that more output is demanded at lower price levels. [56]