A decrease in aggregate demand will cause
A) prices to fall according to classical economists, and unemployment to increase according to Keynes.
B) prices to fall and unemployment to increase according to both classical economists and Keynes.
C) aggregate supply to fall according to classical economists, and prices to fall according to Keynes.
D) aggregate supply to fall according to Keynes, and unemployment to increase according to classical economists.

Question

Quizplus · Accepted Answer

Classical economists believe that a decrease in aggregate demand will lead to lower prices as the market self-adjusts, while Keynesian economics posits that a decrease in aggregate demand will lead to higher unemployment due to sticky wages and prices, preventing the market from clearing.

A Decrease in Aggregate Demand Will Cause