Multiple Choice
The reduction in aggregate demand caused by deflation:
A) further reduces prices, causing a deflationary spiral.
B) will decrease production and increase prices, causing inflation to adjust the price level.
C) further reduces prices, causing aggregate supply to shift left back to long-run equilibrium.
D) will decrease production and increase prices, causing a deflationary trap.
Correct Answer:
Verified
Correct Answer:
Verified
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