Ceteris paribus, in the short run following an increase in the rate of growth in aggregate demand, we would expect to see an increase in the rate of inflation and an increase in the rate of unemployment.

Question

Quizplus · Accepted Answer

An increase in the rate of growth in aggregate demand in the short run typically leads to higher inflation due to increased demand for goods and services, but it usually decreases unemployment as firms hire more workers to meet the higher demand.

Ceteris Paribus, in the Short Run Following an Increase in the Rate