You can generally distinguish an aggregate supply-caused recession from an aggregate demand-caused recession because
A)real GDP will rise in an aggregate supply recession.
B)the price level will fall in an aggregate supply recession.
C)the price level will fall in an aggregate demand recession.
D)real GDP will rise in an aggregate demand recession.

Question

Quizplus · Accepted Answer

In an aggregate demand-caused recession, the overall demand for goods and services in an economy decreases, which typically leads to a lower price level as suppliers reduce prices in an attempt to stimulate demand. This contrasts with an aggregate supply-caused recession, where the issue is on the supply side (e.g., due to increased production costs) and might not necessarily lead to a decrease in the price level.

You Can Generally Distinguish an Aggregate Supply-Caused Recession from an Aggregate