If aggregate demand decreases while aggregate supply is stable, income will ________ and the unemployment rate will ________.

Question

Quizplus · Accepted Answer

When aggregate demand decreases while aggregate supply is stable, the overall demand for goods and services in the economy decreases. This will lead to a decrease in income as businesses start to produce less and lay off workers, which will result in an increase in the unemployment rate. Therefore, the best answer is C, as it shows a decrease in income and an increase in the unemployment rate.

If Aggregate Demand Decreases While Aggregate Supply Is Stable, Income