Figure 5-2

-In Figure 5-2, if the aggregate demand curve moves to the right less rapidly than the aggregate supply curve, then
A)the price level should decline over time.
B)the price level should remain stable.
C)the price level will tend to increase.
D)the level of real GDP should decrease.

Question

Figure 5-2
​ 
-In Figure 5-2, if the aggregate demand curve moves to the right less rapidly than the aggregate supply curve, then
A)the price level should decline over time. 
B)the price level should remain stable. 
C)the price level will tend to increase. 
D)the level of real GDP should decrease.

Quizplus · Accepted Answer

If the aggregate demand curve moves to the right less rapidly than the aggregate supply curve, it means that the increase in production is outpacing the increase in demand. This will create a surplus in the market which will result in a decrease in the price level over time.

Figure 5-2 ​

Figure 5-2