If the Economy Is in Macroeconomic Equilibrium with a Vertical

question 4

Multiple Choice

If the economy is in macroeconomic equilibrium with a vertical AS curve, and then aggregate demand decreases, we expect the AE function to shift to a

• A)lower level and stay there.
• B)higher level and stay there.
• C)higher level but then return to its original position as the price level falls.
• D)higher level, but then shift part of the way down to its original position as the price level falls.
• E)lower level, but then return to its original position as the price level falls.