Ceteris paribus,in the short run following an increase in the rate of growth in Aggregate Demand,we would expect to see an increase in the rate of inflation and an increase in the rate of unemployment.

Question

Quizplus · Accepted Answer

In the short run, an increase in Aggregate Demand typically leads to higher inflation and lower unemployment, not higher unemployment, due to increased production and hiring to meet demand.

Ceteris Paribus,in the Short Run Following an Increase in the Rate