In the long run,a decrease in aggregate demand will lead to a(n):
A)decrease in price and output levels.
B)increase in price and output levels.
C)increase in the price level and a decrease in output.
D)decrease in the price level and an increase in output.
E)decrease in the price level and no change in output.

Question

Quizplus · Accepted Answer

In the long run, the economy is expected to return to its potential output level, so a decrease in aggregate demand will lower the price level but not affect the output, which remains at its natural level.

In the Long Run,a Decrease in Aggregate Demand Will Lead