Which of the following could explain why there is an increase in potential GDP but the equilibrium level of GDP does not rise?
A)SRAS shifted to the right by more than LRAS.
B)AD shifted to the right by more than SRAS.
C)AD shifted to the right by less than SRAS.
D)SRAS and AD do not shift.
E)The shift in LRAS was caused by a rise in investment.

Question

Quizplus · Accepted Answer

If neither the Short-Run Aggregate Supply (SRAS) nor the Aggregate Demand (AD) shifts, the equilibrium level of GDP will not rise despite an increase in potential GDP.

Which of the Following Could Explain Why There Is an Increase