If Aggregate Demand Decreases, And, as a Result, Real Output

question 165

Multiple Choice

If aggregate demand decreases, and, as a result, real output and employment decline but the price level remains unchanged, it is most likely that

• A) the money supply has declined.
• B) the price level is inflexible downward and a recession has occurred.
• C) cost-push inflation has occurred.
• D) productivity has declined.