Use the following graph to answer the following questions.The graph depicts an economy where aggregate demand has decreased.Note that long-run aggregate supply remains changed.

-The graph shows a decrease in the price level due to a decrease in aggregate demand.Real gross domestic product (GDP),however,does not change.The best explanation for the events depicted on this graph is that
A) the economy tends to be unstable and experiences high levels of unemployment.
B) most recessions are caused by changes in aggregate supply.
C) changes in aggregate demand are always positive.
D) the government plays a major role in promoting economic stability.
E) the economy quickly adjusts to changes in aggregate demand and remains at full employment.

Question

Use the following graph to answer the following questions.The graph depicts an economy where aggregate demand has decreased.Note that long-run aggregate supply remains changed.
 
-The graph shows a decrease in the price level due to a decrease in aggregate demand.Real gross domestic product (GDP),however,does not change.The best explanation for the events depicted on this graph is that
A) the economy tends to be unstable and experiences high levels of unemployment. 
B) most recessions are caused by changes in aggregate supply. 
C) changes in aggregate demand are always positive. 
D) the government plays a major role in promoting economic stability. 
E) the economy quickly adjusts to changes in aggregate demand and remains at full employment.

Quizplus · Accepted Answer

The economy quickly adjusts to changes in aggregate demand and remains at full employment, which explains why the real GDP does not change despite a decrease in the price level.

Use the Following Graph to Answer the Following Questions