When aggregate demand increases, all of the following result except:
A) equilibrium level of real GDP increases
B) unemployment decreases
C) the price level increases
D) cost-push inflation results
E) none -10 all of these result when aggregate demand increases

Question

Quizplus · Accepted Answer

An increase in aggregate demand typically results in an increase in the equilibrium level of real GDP, a decrease in unemployment, and an increase in the price level due to demand-pull inflation. However, there is no direct relationship between an increase in aggregate demand and cost-push inflation. Cost-push inflation occurs when the cost of production increases, leading to an increase in prices regardless of aggregate demand.

When Aggregate Demand Increases, All of the Following Result Except