The AD-AS Model Predicts That a Negative AD Shock Will

Multiple Choice

The AD-AS model predicts that a negative AD shock will cause the price level to ___________ from the initial to a new long-run equilibrium level.But the model is silent about how fast the price level will ___________ from the initial to the new level;the model cannot explain ___________.

A) decrease;decrease;the inflation rate
B) decrease;decrease;the price level
C) increase;increase;the inflation rate
D) decrease;decrease;stagflation
E) increase;increase;the price level