Answer:
a. a decrease in AD and an increase in AS; fall in the price level and the decrease in real GDP
Explanation:
During a recession, the aggregate demand is the first to decrease. As a result of lower demand, inventories will increase resulting in an increase in the aggregate supply. Recessions tend to decrease inflation, which results in lower price levels and an overall decrease in real GDP. Recessions will continue until the aggregate demand increases again, increasing the aggregate supply.
I believe the answer is B
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There seems to be an error in your question. Budget deficit is when the government spending exceeds its revenue, yet your question makes no mention of expenses. However, it seems to be referring to something we call the "negative output gap", where actual output is lower than potential output. If this is the case, then the output gap is $100. (I suspect you omitted the million as no country, not even fictional, only produces $500.)
The total amount of money that businesses take in by selling goods and services is called ________. "PROFIT"?