If the aggregate demand and supply curves intersect in the positively sloped range of the aggregate supply curve,a decrease in aggregate demand decreases
A) the price level but not total real output.
B) total real output but not the price level.
C) both total real output and the price level.
D) neither total real output nor the price level.
E) total employment while increasing the price level.

Question

Quizplus · Accepted Answer

When the aggregate demand decreases, it leads to a downward shift in the aggregate demand curve. In the positively sloped range of the aggregate supply curve, this results in a lower equilibrium price level and a decrease in total real output, as the economy moves to a new equilibrium point with lower output and prices.

If the Aggregate Demand and Supply Curves Intersect in the Positively