In the short run, if aggregate demand shifts to the left while the position of the short-run aggregate supply curve does NOT change, then
A) the level of economic activity rises.
B) a recessionary gap occurs.
C) there is no change in real GDP and the price level.
D) an inflationary gap occurs.

Question

Quizplus · Accepted Answer

If aggregate demand shifts to the left while the position of the short-run aggregate supply curve does not change, there will be a decrease in both output and price level. This results in a recessionary gap, which is the difference between the economy's potential and actual GDP.

In the Short Run, If Aggregate Demand Shifts to the Left