Use the following graph to answer the following questions.This graph depicts an economy where aggregate demand has decreased,with no change in either short-run aggregate supply (SRAS)or long-run aggregate supply (LRAS).

-As a result of aggregate demand decreasing,we can see that the price level ________ and real gross domestic product (GDP)________.
A) increased; increased
B) decreased; decreased
C) remained unchanged; increased
D) decreased; remained unchanged
E) increased; decreased

Question

Use the following graph to answer the following questions.This graph depicts an economy where aggregate demand has decreased,with no change in either short-run aggregate supply (SRAS)or long-run aggregate supply (LRAS).
 
-As a result of aggregate demand decreasing,we can see that the price level ________ and real gross domestic product (GDP)________.
A) increased; increased 
B) decreased; decreased 
C) remained unchanged; increased 
D) decreased; remained unchanged 
E) increased; decreased

Quizplus · Accepted Answer

When aggregate demand decreases, we see a decrease in both price level and real GDP. This is depicted by a leftward shift in the AD curve, resulting in a new intersection with the SRAS and LRAS curves at a lower level of both price level and real GDP.

Use the Following Graph to Answer the Following Questions