New Classical Economists Say That an Unanticipated Decrease in Aggregate

question 242

Multiple Choice

New classical economists say that an unanticipated decrease in aggregate demand first

• A) decreases the price level and real output, and then decreases long-run aggregate supply.
• B) decreases long-run aggregate supply, and then decreases the price level and real output.
• C) reduces short-run aggregate supply, and then reduces long-run aggregate supply.
• D) decreases the price level and real output, and then increases short-run aggregate supply such that the economy returns to the full-employment level of output.