An economic contraction caused by a shift in aggregate demand remedies itself over time as the expected price level falls, shifting aggregate supply right. (Option C)
When a change in aggregate demand results in an economic contradiction, the economy is in trouble and demand is falling. A decrease in demand will lead to lower product prices and an increase in supply, which will cause the overall supply to shift to the right. As a result, the aggregate supply will shift to the right and the predicted price level will decline. The selection is thus accurate.
Options A, B, and D's descriptions of the potential effects of the economic recession are at odds with one another. Therefore, everyone of these choices is erroneous.
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