In the Keynesian model, an aggregate demand shock
A) will cause the aggregate demand curve to shift, leading to a change in the price level and real GDP.
B) will cause the aggregate demand curve to shift, leading to a change in the price level but not real GDP.
C) will cause the aggregate demand curve to shift, leading to a change in real GDP but not the price level.
D) will not lead to a shift of the aggregate demand curve.

Question

Quizplus · Accepted Answer

In the Keynesian model, an aggregate demand shock would cause the aggregate demand curve to shift, leading to a change in both the price level and real GDP. This is because changes in aggregate demand would affect both the quantity of goods and services demanded (real GDP) as well as the prices of those goods and services.

In the Keynesian Model, an Aggregate Demand Shock