If aggregate demand shifts to the left by $400 billion and aggregate supply is upward-sloping,then real output will decrease by
A)$400 billion,and the price level will not change.
B)Less than $400 billion,and the price level will fall.
C)$400 billion,and the price level will fall.
D)More than $400 billion, and the price level will not change.

Question

Quizplus · Accepted Answer

When aggregate demand decreases in an upward-sloping aggregate supply curve, both real output and the price level decrease, but the decrease in real output is less than the shift in aggregate demand due to the downward pressure on prices.

If Aggregate Demand Shifts to the Left by $400 Billion