A negative aggregate demand shock results in
A) decreased GDP, decreased unemployment and rising prices.
B) increased GDP, increased unemployment and falling prices.
C) increased GDP, decreased unemployment and falling prices.
D) decreased GDP, increased unemployment and falling prices.
E) decreased GDP, increased unemployment and rising prices.

Question

Quizplus · Accepted Answer

A negative aggregate demand shock leads to decreased demand for goods and services, which leads to a decrease in GDP. With decreased demand for goods and services, businesses may cut jobs, leading to increased unemployment. Additionally, with less demand, prices may fall as businesses try to encourage sales.

A Negative Aggregate Demand Shock Results in