A decrease in AD lowers real GDP, increases the unemployment rate and
decreases the price level.
Economics MCQ - Economics Section 1
If the economy is in expansion caused by an increase in AD, then
commodity prices will increase.
At full employment, a weaker currency reduces the purchasing power of
all domestic currency denominated assets. Households respond by
reducing general expenditures and increasing savings. This is known as
the wealth effect.
Higher aggregate demand and higher aggregate supply raise real GDP
and lower unemployment.
