The price level will increase while real GDP decreases when:

aggregate demand decreases/shifts to the left

short-run aggregate supply decreases/shifts to the left

short-run aggregate supply increases/shifts to the right

aggregate demand increases/shifts to the right

Expert Solution

When price level increases while GDP decreases when, aggregate demand decreases/shifts to the left. This is so because GDP decreases which leads to a decrease in consumer spending and hence, aggregate demand decreases.

Rahul Sunny answered 2 years ago

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