Refer to the information provided in Figure 14.2 below to answer the questions that follow. Figure 14.2 -Refer to Figure 14.2. If economic policy causes aggregate demand curve shifts from AD₂ to AD₁, then A) output decreases to Y₀ and the price level decreases to P₀. B) output decreases to less than Y₁. C) the price level decreases lower than P₀ and output decreases to Y₀. D) none of the above

Question

Quizplus · Accepted Answer

When the aggregate demand curve shifts from AD2 to AD1, it indicates a decrease in aggregate demand, leading to a decrease in both output and the price level, reaching Y0 and P0 respectively.

Refer to the Information Provided in Figure 14