Asked by Sarah-Cate Parker on Jun 10, 2024
Verified
Other things the same, a decrease in aggregate demand decreases both inflation and unemployment.
Aggregate Demand
The complete demand for all categories of goods and services in an economy, evaluated at a given price level for a particular period.
Inflation
How fast the broad price levels for goods and services climb, undercutting the ability to buy.
Unemployment
The condition of someone being without a job despite actively looking for work, expressed as a percentage of the labor force.
- Identify the effects of aggregate demand and supply shocks on the economy.
Verified Answer
HN
Heena NaviyaJun 16, 2024
Final Answer :
False
Explanation :
A decrease in aggregate demand typically leads to lower inflation but higher unemployment, as reduced demand for goods and services can lead to lower prices but also less production, which can result in layoffs or reduced hiring.
Learning Objectives
- Identify the effects of aggregate demand and supply shocks on the economy.