If there is an unanticipated decrease in aggregate demand, which of the following is most likely to occur?
A) an increase in the price level
B) a reduction in employment
C) an increase in the growth rate of real GDP
D) an increase in consumption

Question

Quizplus · Accepted Answer

An unanticipated decrease in aggregate demand means that consumers are buying fewer goods and services than anticipated. This, in turn, causes firms to reduce production, leading to a cut in employment. Therefore, B is the correct answer. A is incorrect because a decrease in aggregate demand would lead to a decrease in the price level due to lower demand for goods and services. C is incorrect because a decrease in aggregate demand would lead to a decrease in the growth rate of real GDP. D is incorrect because a decrease in aggregate demand would lead to a decrease in consumption.

If There Is an Unanticipated Decrease in Aggregate Demand, Which