Refer to the diagram given below. Suppose an increase in aggregate demand shifts AD₁ to AD₂.At P₁, the amount of output demanded will be: A)equal to the amount of output supplied. B)greater than the amount of output supplied. C)less than the amount of output supplied. D)at the full-employment level of output.

Question

Quizplus · Accepted Answer

An increase in aggregate demand shifts the aggregate demand curve to the right. As a result, at the original price level (P₁), there will be excess demand for goods and services, leading to an increase in output demanded. Therefore, the amount of output demanded will be greater than the amount of output supplied.

Refer to the Diagram Given Below