-Refer to the above figure. If the aggregate demand curve shifts beyond AD₅, which of the following would we NOT expect?
A)strong demand-pull inflation
B)no increase in real Gross Domestic Product (GD
C)strong and rapid increases in the price level
D)increases in real net domestic product

Question

-Refer to the above figure. If the aggregate demand curve shifts beyond AD₅, which of the following would we NOT expect?
A)strong demand-pull inflation 
B)no increase in real Gross Domestic Product (GD
C)strong and rapid increases in the price level 
D)increases in real net domestic product

Quizplus · Accepted Answer

When the aggregate demand curve shifts beyond AD₅, the economy is likely operating at or beyond full capacity, leading to demand-pull inflation without an increase in real GDP. Therefore, we would not expect increases in real net domestic product.

-Refer to the Above Figure