Refer to the information provided in Figure 15.2 below to answer the questions that follow.
Figure 15.2
-Refer to Figure 15.2.If the economy is currently at Point B and policy makers implement a policy which decreases the aggregate demand curve to AD₁,

Question

Refer to the information provided in Figure 15.2 below to answer the questions that follow.

Figure 15.2
-Refer to Figure 15.2.If the economy is currently at Point B and policy makers implement a policy which decreases the aggregate demand curve to AD₁,

Quizplus · Accepted Answer

Decreasing the aggregate demand curve will lead to a decrease in both GDP and the price level. Therefore, the correct choice is B. The inflation rate is not mentioned in the question, so D is not a relevant choice. C is incorrect because a decrease in aggregate demand will lead to a decrease in GDP, not an increase.

Refer to the Information Provided in Figure 15