An economy in recession could be returned to a full-employment output level when aggregate demand _____ or when short-run aggregate supply:
A) increases; increases.
B) increases; decreases.
C) decreases; increases.
D) decreases; decreases.

Question

Quizplus · Accepted Answer

An economy in recession can return to full-employment output if aggregate demand increases (stimulating more production and employment) or if short-run aggregate supply increases (making more goods and services available at lower prices, which can also stimulate demand).

An Economy in Recession Could Be Returned to a Full-Employment