What occurs during a negative demand shock?
A) Output and price level increase.
B) Output and price level decrease.
C) Output increases;price level decreases.
D) Output decreases;price level increases.

Question

Quizplus · Accepted Answer

During a negative demand shock, there is a decrease in aggregate demand, leading to a reduction in both output and the price level as businesses produce less and lower prices to stimulate demand.

What Occurs During a Negative Demand Shock