An economy is at full employment when aggregate demand decreases. Which of the following changes does not occur as a result of a decrease in aggregate demand?

Question

An economy is at full employment when aggregate demand decreases. Which of the following changes does  not  occur as a result of a decrease in aggregate demand?

Accepted Answer

The long-run aggregate supply curve shifts leftward to create the new long-run equilibrium.

Answer

Real GDP decreases in the short run.

Answer

As the money wage rate falls in the long run, the short-run aggregate supply curve rightward.

Answer

A recessionary gap arises.

Answer

The price level decreases.

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An economy is at full employment when aggregate demand decreases. Which of the f...

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