Experience has shown that,during recessions,the ___________ falls but the price level ___________.This evidence ___________ the prediction of the AD-AS model.

Question

Quizplus · Accepted Answer

During recessions, the inflation rate typically falls, but the price level may keep rising due to factors like cost-push inflation. This contradicts the AD-AS model, which predicts that a decrease in aggregate demand during a recession should lead to a falling price level.

Experience Has Shown That,during Recessions,the ___________ Falls but the Price