Which of the following would cause prices and real GDP to rise in the short run?
A) Short-run aggregate supply shifts right.
B) Short-run aggregate supply shifts left.
C) Aggregate demand shifts right.
D) Aggregate demand shifts left.

Question

Quizplus · Accepted Answer

When aggregate demand shifts right, it leads to an increase in both prices and real GDP in the short run. This is because firms increase their production in response to the increased demand, leading to an increase in real GDP. However, since there is a limited supply of goods and services in the short run, the increased demand leads to rising prices.

Which of the Following Would Cause Prices and Real GDP