Within the AD/AS Model, If an Unanticipated Reduction in Aggregate

question 80

Multiple Choice

Within the AD/AS model, if an unanticipated reduction in aggregate demand results in less than the full-employment rate of output,

• A) the natural rate of unemployment will increase.
• B) long-run aggregate supply will increase.
• C) lower resource prices and declining interest rates will direct the economy back to full employment.
• D) higher resource prices and rising interest rates will direct the economy back to full employment.