True. The price level can remain stuck at its old level even when aggregate demand declines, especially in situations where prices are sticky or when there are short-term rigidities in the economy. This phenomenon can occur due to factors such as contracts, menu costs, or other frictions that prevent prices from adjusting immediately.
True or false: The price level can remain stuck at its old level even when aggregate demand declines.
True false question.
True
False
1 answer