If the economy's AS curve is upward sloping,a negative shock to aggregate demand will result in
A)an increase in prices and no change in real GDP.
B)a decrease in prices but no change in real GDP.
C)an increase in real GDP and no change in prices.
D)an increase in both real GDP and prices.
E)a decrease in both real GDP and prices.

Question

Quizplus · Accepted Answer

A negative shock to aggregate demand in an economy with an upward sloping aggregate supply (AS) curve will lead to a decrease in both real GDP and prices. This is because a decrease in aggregate demand shifts the aggregate demand curve to the left, resulting in a lower equilibrium price level and a lower quantity of goods and services produced and sold in the economy.

If the Economy's AS Curve Is Upward Sloping,a Negative Shock