Question

When aggregate demand shifts left along the short-run aggregate supply curve, a. unemployment and prices fall....

When aggregate demand shifts left along the short-run aggregate supply curve,

a.

unemployment and prices fall.
b.

unemployment and prices rise.
c.

unemployment falls and prices rise.
d.

unemployment rises and prices fall.
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Answer #1

Answer;

When aggregate demand shifts left along the short-run aggregate supply curve,

D] unemployment rises, and prices fall.

Explanation:

As aggregate demand shifts left along the short-run aggregate supply curve, unemployment is higher and inflation is lower. If the AD curve shifts to the left, along the short-run aggregate supply curve, then the equilibrium quantity of output and the price level will fall, leading to a lower real GDP and a lower price level.

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