An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level
A)rises, shifting aggregate demand right.
B)rises, shifting aggregate demand left.
C)falls, shifting aggregate supply right.
D)falls, shifting aggregate supply left.

Question

Quizplus · Accepted Answer

As the expected price level falls, it reduces production costs, leading to an increase in aggregate supply, which shifts the aggregate supply curve to the right, helping to remedy the economic contraction.

An Economic Contraction Caused by a Shift in Aggregate Demand