Following an Unexpected Decline in Aggregate Demand, Once Production Cutbacks

question 48

Multiple Choice

Following an unexpected decline in aggregate demand, once production cutbacks start offsetting rising inventory levels:

• A)the aggregate demand curve will shift to the right.
• B)the aggregate supply curve will shift to the left.
• C)the economy will return to its natural rate of unemployment.
• D)the short-run Phillips curve will shift to the right.
• E)the economy will face both higher inflation and a higher unemployment rate.

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