Beginning from a position of long-run equilibrium,suppose there is an increase in the aggregate demand curve.After adjustment and comparing the economy's new long-run equilibrium with its original long-run position,the result would be an increase in:
A) real GDP.
B) the price level (CPI).
C) the unemployment rate.
D) a and b, but not

Question

Quizplus · Accepted Answer

In the long-run, an increase in aggregate demand leads to a higher price level (inflation) but does not change real GDP, as the economy returns to its potential output.

Beginning from a Position of Long-Run Equilibrium,suppose There Is an Increase