Suppose That Nominal Aggregate Demand Falls by 4 Percent,and at the Same

Multiple Choice

Suppose that nominal aggregate demand falls by 4 percent,and at the same time every marginal cost also falls by 4 percent.The importance of menu cost theory is that in this situation the price level ________,meaning that a recession ________.

A) must fall by 4 percent as well,does not occur
B) must fall by 4 percent as well,must occur
C) still might not fall,may not occur
D) still might not fall,may occur