If the AD curve shifts rightward while the AS curve and potential GDP don't change,then
A)the economy will move from a peak into recession.
B)the expansion phase of the business cycle occurs.
C)there will be no change in real GDP,so the economy is at the peak of the cycle.
D)there will be no change in real GDP,so the economy is at the trough of the cycle.
E)real GDP does not change.

Question

Quizplus · Accepted Answer

If the AD curve shifts rightward while the AS curve and potential GDP don't change, it means that there is an increase in aggregate demand which leads to an increase in real GDP and the price level. This is the characteristic of the expansion phase of the business cycle. Therefore, the correct answer is B.

If the AD Curve Shifts Rightward While the AS Curve