The decline in aggregate demand that occurred during the Great Depression caused a drop in real GDP
A) and deflation.
B) but an increase in the price level.
C) but a modest rise in inflation.
D) but no change in the price level.

Question

Quizplus · Accepted Answer

The decline in aggregate demand during the Great Depression caused a drop in real GDP and deflation. As demand for goods and services decreased, businesses had to lower their prices in order to sell their products, leading to a general decrease in prices throughout the economy (i.e., deflation).

The Decline in Aggregate Demand That Occurred During the Great