If aggregate demand decreases and aggregate supply decreases,the level of real output will
A)Decrease,and the price level will definitely decrease.
B)Decrease,and the price level will definitely increase.
C)Either increase or decrease,but the price level will stay the same.
D)Decrease,but the price level is indeterminate.

Question

Quizplus · Accepted Answer

When both aggregate demand and aggregate supply decrease, the level of real output will decrease. However, the price level is indeterminate as it could either increase, decrease or stay the same depending on various factors such as the relative magnitude of the decrease in aggregate demand and aggregate supply, the level of inflation expectations, and supply shocks.

If Aggregate Demand Decreases and Aggregate Supply Decreases,the Level of Real