If there is an unanticipated increase in aggregate demand,which of the following is most likely to occur?
A)an increase in the price level (inflation)
B)an increase in the rate of unemployment
C)a reduction in the growth rate of real GDP
D)a decrease in LRAS to restore full employment

Question

Quizplus · Accepted Answer

An increase in aggregate demand leads to increased demand for goods and services, which can lead to a shortage in supply and thereby an increase in the price level (inflation). This is the most likely outcome when aggregate demand increases unexpectedly.

If There Is an Unanticipated Increase in Aggregate Demand,which of the Following