Question

Which of the following changes in the aggregate market will result in a decrease in the equilibrium price level and a decrease in the equilibrium level of real GDP?
A. An increase in short-run aggregate supply.
B. A decrease in short-run aggregate supply.
C. An increase in aggregate demand.
D. A decrease in aggregate demand.

Answer 1

Answer:

B. A decrease in short-run aggregate supply.

Explanation:

In the case when there is a decrease in the level of the equilibrium price and also in the real GDP so this would result in decrease in aggregate supply i.e. short run

But when there is a decrease in the level of equilibrium price but the real GDP would increase so there is an increase in aggregate supply i.e. short run

So according to the given situation, the option b is ocrrect