An increase in investment spending leads to _____ in the price level and _____ in real GDP in the short run.
A) an increase; no change
B) a decrease; no change
C) no change; no change
D) an increase; an increase

Question

Quizplus · Accepted Answer

An increase in investment spending will lead to an increase in aggregate demand, which will lead to an increase in both the price level and real GDP in the short run. Therefore, option D is the correct answer.

An Increase in Investment Spending Leads to _____ in the Price