Beginning from the full-employment level of real GDP, an increase in one of the components of the aggregate demand curve will increase the:
A) average level of prices (CPI).
B) unemployment rate.
C) natural level of real GDP.
D) level of investment spending.
E) level of government spending.

Question

Quizplus · Accepted Answer

An increase in aggregate demand from the full-employment level of real GDP typically leads to higher price levels (inflation) as the economy operates beyond its capacity, rather than affecting unemployment, natural GDP, or specific spending components directly.

Beginning from the Full-Employment Level of Real GDP, an Increase