What sequence of events results from a decrease in aggregate demand?
A) The price level falls, inventories decline, firms respond by increasing output and employment.
B) The price level falls, inventories increase, firms respond by reducing output and employment.
C) The price level rises, inventories decline, firms respond by increasing output and employment.
D) The price level rises, inventories increase, firms respond by increasing output and employment.
Correct Answer:
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