Ask Question
Today, 08:11

When aggregate demand meets aggregate supply in the horizontal portion of the aggregate supply curve, a decrease in demand will cause output to fall but no change in prices. a decrease in demand will cause prices to rise but no change in output. a decrease in demand will cause prices to fall but no change in output. a decrease in demand will cause output to rise but no change in prices.

+1
Answers (1)
  1. Today, 08:25
    0
    Answer: Option (a) is correct.

    Explanation:

    Correct option: A decrease in demand will cause output to fall but no change in prices.

    When aggregate supply curve is horizontal in the AD-AS diagram then that aggregate supply curve is perfectly elastic. It means that if there is any changes in the aggregate demand, as a result quantity of output changes but price remains the same.

    Hence, if there is a decrease in the aggregate demand, as a result there is a leftward shift in the aggregate demand curve which reduces the output level and price remains constant.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “When aggregate demand meets aggregate supply in the horizontal portion of the aggregate supply curve, a decrease in demand will cause ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers