-Refer to the above figure. An increase in aggregate demand beyond real Gross Domestic Product (GDP) level Y₁ would result in A) higher real GDP but not a higher price level. B) a lower price level but no change in real GDP. C) a higher price level but no change in real GDP. D) a lower price level and an increases in real GDP.

Question

Quizplus · Accepted Answer

An increase in aggregate demand beyond the full employment level of GDP (Y1) typically leads to a higher price level without an increase in real GDP, as the economy is already at or near its capacity.

-Refer to the Above Figure