Refer to the information provided in Figure 29.2 below to answer the question(s) that follow. Figure 29.2 -Refer to Figure 29.2. If economic policy causes aggregate demand curve shifts from AD₂ to AD₁, then A) output decreases to Y₀ and the price level decreases to P₀. B) output decreases to less than Y₁. C) the price level decreases lower than P₀ and output decreases to Y₀. D) none of the above.

Question

Quizplus · Accepted Answer

The shift in aggregate demand from AD2 to AD1 leads to a decrease in output to Y0 and a decrease in the price level to P0.

Refer to the Information Provided in Figure 29