Ask Question
25 September, 20:16

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.

+2
Answers (1)
  1. 25 September, 23:47
    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?
Get 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 there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers