A decrease in aggregate demand results in a(n)________ in the ________.
A)recession; long run
B)expansion; long run
C)expansion; short run
D)recession; short run
E)recovery; long run

Question

Quizplus · Accepted Answer

A decrease in aggregate demand will cause a leftward shift in the aggregate demand curve. In the short run, this results in a decrease in output and price level, leading to a recession. In the long run, prices adjust and the economy returns to its potential output, although unemployment may remain elevated in the short run.

A Decrease in Aggregate Demand Results in A(n)________ in the ________

A Decrease in Aggregate Demand Results in A(n) in the