In the short run, policy that changes aggregate demand also changes which of the following?
A)both unemployment and the price level
B)neither unemployment nor the price level
C)only unemployment
D)only the price level

Question

Quizplus · Accepted Answer

Policy that changes aggregate demand, such as monetary or fiscal policy, will affect both unemployment and the price level in the short run. An increase in aggregate demand will lead to lower unemployment and higher prices, while a decrease in aggregate demand will lead to higher unemployment and lower prices.

In the Short Run, Policy That Changes Aggregate Demand Also