If aggregate demand decreases and neither short-run nor long-run aggregate supply changes, then
A) there is a recessionary gap.
B) in the long run, the long-run aggregate supply will decrease.
C) the price level increases in the short-run and decreases in the long-run.
D) there is an inflationary gap.

Question

Quizplus · Accepted Answer

A decrease in aggregate demand without any change in either short-run or long-run aggregate supply would result in a decrease in real GDP below potential GDP, creating a recessionary gap.

If Aggregate Demand Decreases and Neither Short-Run nor Long-Run Aggregate