Question

In: Economics

How would you describe a typical recession using an aggregate demand--aggregate supply graph?



How would you describe a typical recession using an aggregate demand--aggregate supply graph? 

Supply decreases, shifts left. 

Demand increases, shifts right 

Supply increases, shifts right 

None of the answers 

Demand decreases, shifts left

Solutions

Expert Solution

Correct Answer:

E

Recession is identified by decrease in aggregate demand and AD curve shifts to the left. It leads to decrease in real output, price level and unemployment rate also increases.


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