If aggregate demand changes while aggregate supply is stable, output and the unemployment rate are

Question

Quizplus · Accepted Answer

According to the classical model, when aggregate demand changes while aggregate supply remains stable, the economy adjusts in the short run by changing the price level. As prices increase, output and employment decrease, and vice versa. Therefore, output and the unemployment rate are negatively related.

If Aggregate Demand Changes While Aggregate Supply Is Stable, Output