Figure 19-10

-Refer to Figure 19-10.Europe suffers a recession.Assuming all else remains constant,this would be represented as a movement from

Question

Figure 19-10
 
-Refer to Figure 19-10.Europe suffers a recession.Assuming all else remains constant,this would be represented as a movement from

Quizplus · Accepted Answer

A recession would lead to a decrease in aggregate demand, which would result in a leftward shift of the aggregate demand curve from C to D, as shown in the diagram. All else remaining constant, this would cause a decrease in both real GDP (Y) and the price level (P). Therefore, the correct answer is B, a movement from C to D.

Figure 19-10 -Refer to Figure 19-10.Europe Suffers a Recession.Assuming All Else Remains