An economy is in long-run equilibrium. Which result occurs if there is a negative aggregate demand shock

This choice suggests that a negative aggregate demand shock would increase the price level and decrease unemployment, which contradicts the effects of such a shock. A decline in aggregate demand typically leads to lower prices as businesses compete to sell their reduced output, and unemployment rises as firms cut back on hiring.

While higher unemployment may occur due to decreased demand, a higher price level is not a typical outcome of a negative aggregate demand shock. In fact, the shock tends to decrease price levels as firms lower prices to stimulate sales, making this option inconsistent with the economic principles governing aggregate demand shifts.

This choice incorrectly implies that lower demand would lead to a decrease in unemployment. In reality, a negative aggregate demand shock raises unemployment because businesses reduce their workforce in response to falling demand and lower prices, contradicting the assertion of a decrease in unemployment.