If policymakers increase aggregate demand, then in the short run the price level
A)rises and unemployment falls.
B)and unemployment rise.
C)and unemployment fall.
D)falls and unemployment rises.

Question

Quizplus · Accepted Answer

Increasing aggregate demand typically leads to higher output and employment, which reduces unemployment. As demand for goods and services increases, prices tend to rise due to higher demand relative to supply.

If Policymakers Increase Aggregate Demand, Then in the Short Run