For a given aggregate supply curve,price level and output will both increase when aggregate demand decreases.

Question

Quizplus · Accepted Answer

This statement is incorrect as a decrease in aggregate demand would cause a leftward shift of the aggregate demand curve, leading to a decrease in both price level and output. Only a movement along the aggregate supply curve, such as an increase in production costs or a decrease in resource prices, would cause price level and output to increase together.

For a Given Aggregate Supply Curve,price Level and Output Will