Along the short-run supply curve (SRAS), a decrease in the aggregate demand curve will decrease:
A) both the price level and real GDP.
B) real GDP without raising the price level.
C) the price level without affecting real GDP.
D) the price level but reduce real GDP.

Question

​ Along the short-run supply curve (SRAS), a decrease in the aggregate demand curve will decrease:
A) ​both the price level and real GDP.
B) ​real GDP without raising the price level.
C) ​the price level without affecting real GDP.
D) ​the price level but reduce real GDP.

Quizplus · Accepted Answer

In the short run, a decrease in aggregate demand leads to a lower price level and reduced real GDP, as firms reduce output in response to decreased demand, which also leads to lower prices.

​ Along the Short-Run Supply Curve (SRAS), a Decrease in the Aggregate

Along the Short-Run Supply Curve (SRAS), a Decrease in the Aggregate