Final answer:
In a market with sticky prices and wages, a decrease in aggregate demand results in unchanged prices and wages, leading to unemployment and excess supply of goods.
Step-by-step explanation:
When a market experiences sticky prices and wages, it means that these do not adjust immediately in response to changes in economic conditions. Following a decrease in aggregate demand in such a market, prices and wages remain unchanged in the immediate term. In both the labor and goods markets, demand curves shift to the left from Do to D₁, but wages and prices do not immediately decline. This creates an excess supply of labor, leading to unemployment, and an excess supply of goods, contributing to a recession.