Assuming a long-run aggregate supply curve, a decrease in consumer confidence results in _______ in output and _______ in prices.
A)a decrease; no change
B)no change; a decrease
C)a decrease; a decrease
D)an increase; no change

Question

Quizplus · Accepted Answer

In the long run, aggregate supply is vertical, meaning output is determined by factors like technology and resources, not by demand. A decrease in consumer confidence reduces aggregate demand, leading to lower prices but no change in output.

Assuming a Long-Run Aggregate Supply Curve, a Decrease in Consumer