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The Aggregate Demand (AD) curve is generally downward sloping, indicating an inverse relationship between the overall price level and the quantity of goods and services demanded in an economy. As prices decrease, consumers and businesses are more likely to purchase more, leading to an increase in overall demand. This shape can be attributed to three effects: the wealth effect, the interest rate effect, and the exchange rate effect. Each of these factors contributes to the way changes in price levels influence consumer and investment behavior.

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