In the long run, a decrease in aggregate demand, all other things unchanged, will cause the price level to _______ and potential output to _______ .

Question

Quizplus · Accepted Answer

In the long run, a decrease in aggregate demand leads to a lower price level as the economy adjusts, but potential output remains stable because it is determined by factors like technology and resources, not by demand.

In the Long Run, a Decrease in Aggregate Demand, All