the aggregate supply/demand model suggests this caused
A. a decline in consumption and a decrease in aggregate demand.
(Due to decline in wealth, consumption spending declined. This in turn caused a decrease in aggregate demand in the economy.)
The aggregate supply/demand model:
The aggregate demand-aggregate supply (AD-AS) model is a way to depict how national income is determined and how the price level evolves.
This can be used to demonstrate the many stages of the business cycle and how certain occurrences can influence real GDP and inflation, two of the most important macroeconomic indicators.
The aggregate demand and supply within an economy are graphically represented by the AD-AS model. John Maynard Keynes, a renowned economist, founded it. This model is frequently used by economists to demonstrate how aggregate supply and demand vary as the economy expands and contracts.
The AD-AS model demonstrates the relationship between long-run economics and short-run economics.
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