In the short run, an increase in aggregate demand
A) lowers the price level and decreases real GDP.
B) lowers the price level and increases real GDP.
C) raises the price level and increases real GDP.
D) raises the price level and decreases real GDP.

Question

Quizplus · Accepted Answer

In the short run, an increase in aggregate demand typically raises the price level due to higher demand for goods and services, and increases real GDP as firms produce more to meet the increased demand.

In the Short Run, an Increase in Aggregate Demand