Assuming an upward-sloping short-run aggregate supply curve, ________ in aggregate demand will result in a new equilibrium at a greater level of output and ________ price level.
A) an increase; a higher
B) an increase; a lower
C) a decrease; a lower
D) a decrease; no change in the

Question

Quizplus · Accepted Answer

An increase in aggregate demand will lead to a shift to the right of the short-run aggregate supply curve, resulting in a new equilibrium at a greater level of output and a higher price level. This is due to higher demand putting pressure on firms to increase production, which can lead to higher prices as firms reach capacity constraints.

Assuming an Upward-Sloping Short-Run Aggregate Supply Curve, ________ in Aggregate