What impact will a negative demand shock have on the main measures of economic performance?
A)Real GDP will increase, inflation will increase, and unemployment will decrease.
B)Real GDP will decrease, inflation will decrease, and unemployment will increase.
C)Real GDP will decrease, inflation will increase, and unemployment will increase.
D)Real GDP will increase, inflation will decrease, and unemployment will decrease.

Question

Quizplus · Accepted Answer

A negative demand shock leads to a decrease in real GDP as overall demand in the economy falls. This typically results in lower inflation due to decreased pressure on prices and higher unemployment as businesses reduce production and lay off workers.

What Impact Will a Negative Demand Shock Have on the Main