Figure 7-4 -According to the Classical Economists When Aggregate Demand Declines,AD₀ to Aggregate

Multiple Choice

Figure 7-4

-According to the classical economists when aggregate demand declines,AD₀ to AD₁ in the figure above,and output,falls below the natural rate of unemployment at 3000,wages and prices would

A) fall to E₁ causing output to rise and unemployment would be temporary.
B) rise to E₀ causing output to rise and unemployment would be temporary.
C) rise to A causing output to fall and unemployment would be temporary.
D) fall to A causing output to fall and unemployment would be permanently increased.