Figure 35-2
Use the pair of diagrams below to answer the following questions.
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in aggregate demand moves the economy to
A)A and 2.
B)D and 3.
C)E and 3.
D)None of the above is correct.

Question

Figure 35-2
Use the pair of diagrams below to answer the following questions. 
-Refer to Figure 35-2.If the economy starts at C and 1,then in the short run,a decrease in aggregate demand moves the economy to
A)A and 2. 
B)D and 3. 
C)E and 3. 
D)None of the above is correct.

Quizplus · Accepted Answer

According to the diagram, a decrease in aggregate demand would shift the AD curve to the left, leading to a decrease in output and inflation. This would cause the economy to move to point D and 3 in the short run.

Figure 35-2 Use the Pair of Diagrams Below to Answer the Following