An increase in aggregate expenditure has what effect on the equilibrium GDP?
A)Equilibrium GDP rises.
B)Equilibrium GDP is not affected by an increase in aggregate expenditure.
C)Equilibrium GDP falls.
D)Equilibrium GDP may rise or fall depending on the size of the increase in aggregate expenditure relative to the initial level of GDP.

Question

Quizplus · Accepted Answer

An increase in aggregate expenditure shifts the aggregate demand curve to the right, increasing the equilibrium level of output and raising the equilibrium GDP.

An Increase in Aggregate Expenditure Has What Effect on the Equilibrium