Consider the nature of macroeconomic equilibrium.If,at a particular price level,aggregate output demanded is less than that supplied by producers,then
A)the price level will rise toward its equilibrium value.
B)the price level will decline toward its equilibrium value.
C)the aggregate demand curve will shift to the right,re-establishing an equilibrium.
D)the aggregate supply curve will shift to the left,re-establishing an equilibrium.
E)the aggregate supply curve will shift to the right,re-establishing an equilibrium.

Question

Quizplus · Accepted Answer

If aggregate output demanded is less than that supplied by producers, it means there is excess supply in the market, leading to a decline in prices as sellers try to compete with each other to sell their products. This price decline continues until it reaches the equilibrium price level where aggregate output demanded equals that supplied by producers, leading to a macroeconomic equilibrium. Therefore, the correct choice is B - the price level will decline toward its equilibrium value.

Consider the Nature of Macroeconomic Equilibrium