In the context of Aggregate Demand, what does the demand curve illustrate?

The demand curve in the context of Aggregate Demand illustrates the relationship between price levels and the quantity of goods and services demanded in an economy. This relationship is typically inverse; as the overall price level in the economy decreases, the quantity demanded tends to increase, and vice versa. This is due to several effects, including the wealth effect (where lower prices increase consumers' real wealth), the interest rate effect (which can influence investment and spending based on how consumers view their borrowing costs), and the exchange rate effect (which impacts how domestic goods compare with foreign goods). Understanding this relationship helps economists and policymakers analyze how changes in price levels can influence overall economic activity and consumer behavior.