True or false. in the real world, decreases in ad normally lead to decreases in both output and the price level.

1 answer
Question:

True or false. in the real world, decreases in ad normally lead to decreases in both output and the price level.

Answers

False. In this case, the decrease in AD only decreases the output and not the price level. There is a downward inflexibility of the price level in the real world. In contrary, an upward flexible in prices so that there is an increase in both the output and the price level.

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