If policymakers decrease aggregate demand,then in the long run
A)prices will be lower and unemployment will be higher.
B)prices will be lower and unemployment will be unchanged.
C)prices and unemployment will be unchanged.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

In the long run, a decrease in aggregate demand leads to lower prices, but unemployment returns to its natural rate due to wage and price flexibility.

If Policymakers Decrease Aggregate Demand,then in the Long Run