If an economy experiences a decrease in aggregate demand due to a decline in consumer confidence and output falls below potential GDP, which of the following is likely to occur?
A. more consumption and less saving
B. adjustment back to potential GDP
C. increase in price inflation
D. a rise in unemployment
Answer:D
If an economy experiences a decrease in aggregate demand due to a decline in consumer confidence and output falls below potential GDP, which of the following is likely to occur?
A. more consumption and less saving B. adjustment back to potential GDP C. increase in price inflation D. a rise in unemployment
Explanation: Type: Multiple Choice