When aggregate supply exceeds aggregate demand - (1) unemployment falls (2) prices rise (3) inventories accumulate (4) unemployment develops

When aggregate supply exceeds aggregate demand - (1) unemployment falls (2) prices rise (3) inventories accumulate (4) unemployment develops
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(3) inventories accumulate Explanation: Deflation sets in when aggregate supply exceeds aggregate demand. Recession sets in. This will lead to a buildup in stocks (inventories) and this sends a signal to producers either to cut prices (to stimulate an increase in demand) or to reduce output so as to reduce the buildup of excess stocks. Either way -there is a tendency for output to move closer to the current level of demand.
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When aggregate supply exceeds aggregate demand (1) unemployment falls (2) prices rise (3) inventories accumulate (4) unemployment develops

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Concern about an international crisis has caused consumers to save their money and postpone big purchases. What is the effect on aggregate demand and aggregate supply?

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