In the above figure, an increase in aggregate demand has resulted in
A) a decline in the price level.
B) economic growth.
C) an inflationary gap.
D) a recessionary gap.

Question

Quizplus · Accepted Answer

An increase in aggregate demand typically results in higher output and prices, leading to an inflationary gap where actual output exceeds potential output at the current price level.

In the Above Figure, an Increase in Aggregate Demand Has