If aggregate demand is higher than expected, which of the following will not occur?
A) Prices will be higher than expected.
B) The unemployment rate will rise.
C) Inventories will fall below targeted levels.
D) Production will increase.
E) Inflation will increase unexpectedly.

Question

Quizplus · Accepted Answer

If aggregate demand is higher than expected, it means there is an increase in demand for goods and services which will lead to an increase in production, prices, and inflation. However, it would not lead to an increase in the unemployment rate since firms will need more labor to meet the increased demand. Therefore, B is the correct answer.

If Aggregate Demand Is Higher Than Expected, Which of the Following