If the AD curve shifts rightward while the AS curve and potential GDP don't change, then
A) there will be no change in real GDP, so the economy is at the peak of the cycle.
B) there will be no change in real GDP, so the economy is at the trough of the cycle.
C) the economy will move from a peak into a recession.
D) the expansion phase of the business cycle occurs.
E) real GDP does not change.

Question

Quizplus · Accepted Answer

When the Aggregate Demand (AD) curve shifts rightward, it indicates an increase in the demand for goods and services in the economy. If the Aggregate Supply (AS) curve and potential GDP remain unchanged, this increased demand leads to higher production and economic expansion, hence the expansion phase of the business cycle occurs.

If the AD Curve Shifts Rightward While the AS Curve