When monetary and fiscal policymakers expand aggregate demand, which of the following costs to the economy is incurred in the short run?
A)Short-run aggregate supply decreases.
B)The natural rate of unemployment increases.
C)The price level increases.
D)The money supply decreases.

Question

Quizplus · Accepted Answer

When monetary and fiscal policymakers expand aggregate demand, it typically leads to an increase in the price level in the short run. This is because the increased demand for goods and services tends to push prices up, especially if the economy is near or at full capacity.

When Monetary and Fiscal Policymakers Expand Aggregate Demand, Which of the Following