The aggregate demand curve slopes downward due to the real-balances, interest-rate, and foreign-purchases effects:

- At the point when the price level rises, the real value of individuals' nominal assets (like money) falls, decreasing the real value of their nominal wealth. The outcome is that customer spending will diminish since not as much output can be purchased as before.

- In like manner, a more significant price level implies that in the event that you borrow money to buy a good or service, you'll have to get more than previously, causing interest rates to rise. Higher interest rates mean less consumption and investment spending.

- At last, if the price level rises, domestically produced goods become more costly compared with foreign goods, which causes net exports to fall.

There might be different reasons behind the falling nature or downward sloping of the individual demand curve. Some of them are Law of diminishing the marginal utility, Substitution effect, Income effect and so forth