Aggregate demand is the total amount of final goods and services that everyone in an economy — households, firms, the government, and foreign buyers — plans to purchase at each overall price level. Think of it as a demand curve for the whole country at once, rather than for a single product like coffee. When the overall price level rises, the real purchasing power of your savings falls, borrowing becomes more expensive, and domestic exports look pricier to foreign buyers — so total spending across the economy declines. That is why the AD curve slopes downward.

More precisely, aggregate demand is total planned expenditure on domestically produced final goods and services at each price level, holding everything else constant. The curve slopes downward for three distinct reasons: the wealth effect (a higher price level erodes the real value of money holdings), the interest-rate effect (higher prices raise demand for money, pushing up interest rates and reducing borrowing and investment), and the net-export effect (higher domestic prices make exports relatively more expensive abroad, reducing $NX$). This is fundamentally different from why a single good's demand curve slopes down — that reflects a substitution toward cheaper alternatives, which does not apply when every price rises together.