Answer
a) The aggregate demand curve slopes downward since a decreased price level would increase the overall quantity of goods demanded through different effects (such as the interest rate effect, exchange rate effect, and the wealth effect).
b) Different economic forces (such as an increased population) do affect the long run aggregate supply. The price level doesn't affect the long run aggregate supply.
Work Step by Step
c) The short run aggregate supply curve would only be horizontal if the price level stayed the same. If firms changed their prices daily, then the short run aggregate supply curve would be vertical.
d) The economy could also enter a recession if the aggregate demand or short run aggregate supply curve (not just the long run aggregate supply curve).
