A contraction in an aggregate demand can cause:
A) an increase in employment.
B) a decrease in unemployment.
C) an increase in real GDP.
D) a recession.

Question

Quizplus · Accepted Answer

A contraction in aggregate demand refers to a decrease in overall spending in the economy, which can lead to a decrease in production and output, potentially resulting in a recession. This can also lead to an increase in unemployment. Therefore, options A and B are incorrect, and option C may not necessarily occur in this scenario.

A Contraction in an Aggregate Demand Can Cause