In the AD and Solow growth curve model, an increase in aggregate demand

Question

Quizplus · Accepted Answer

In the AD and Solow growth curve model, an increase in aggregate demand leads to an increase in prices and inflation in the short run. However, it does not affect the long-run growth rate, which is determined by factors such as productivity, capital accumulation, and technology. Therefore, option B, which states that an increase in aggregate demand increases the inflation rate but not the growth rate, is the correct choice.

In the AD and Solow Growth Curve Model, an Increase