In the long run,a decrease in aggregate demand will cause a(n)
A)decrease in price and output levels
B)increase in price and output levels
C)increase in the price level and a decrease in output
D)decrease in the price level and an increase in output
E)decrease in the price level and no change in output

Question

Quizplus · Accepted Answer

In the long run, a decrease in aggregate demand leads to a lower price level, but output returns to its natural level due to the economy's self-correcting mechanism.

In the Long Run,a Decrease in Aggregate Demand Will Cause