In practice in the actual economy, a reduction in aggregate demand reduces real output rather than the price level because:
a) Output is sticky or inflexible downward as a result of wage contracts, minimum wage laws, and menu costs among other reasons.
b) Prices are sticky or inflexible downward as a result of resource scarcity, production costs, and interest rate costs among other reasons.
c) Prices are sticky or inflexible downward as a result of wage contracts, minimum wage laws, and menu costs among other reasons.
d) Output is sticky or inflexible downward as a result of resource scarcity, production costs, and interest rate costs among other reasons.
