Assuming an economy starts in long-run equilibrium, if the aggregate demand curve were to shift to the left:
A) prices in the economy would increase.
B) output in the economy would increase.
C) the short-run aggregate supply curve would shift to the left.
D) the long-run effect would be a lower price level.

Question

Quizplus · Accepted Answer

When the aggregate demand curve shifts to the left, it indicates a decrease in the overall demand for goods and services in the economy. This decrease in demand leads to a lower equilibrium price level in the long run as the economy adjusts to the new level of demand.

Assuming an Economy Starts in Long-Run Equilibrium, If the Aggregate