Suppose policymakers take actions that cause a contraction of aggregate demand.Which of the following is a short-run consequence of this contraction?
A)The inflation rate decreases.
B)The level of output decreases.
C)The unemployment rate increases.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

In the short run, a contraction of aggregate demand typically leads to a decrease in the inflation rate, a decrease in the level of output, and an increase in the unemployment rate.

Suppose Policymakers Take Actions That Cause a Contraction of Aggregate