An increase in aggregate demand:
A)raises potential output.
B)reduces potential output.
C)does not change potential output.
D)has an unpredictable effect on potential output.

Question

Quizplus · Accepted Answer

An increase in aggregate demand affects the actual output in the short run but does not change the potential output, which is determined by factors such as technology, resources, and labor supply.

An Increase in Aggregate Demand