-Refer to the above figure. If the aggregate demand curve shifts beyond AD₅, which of the following would we NOT expect? A) Strong demand-pull inflation B) No increase in real Gross Domestic Product (GD C) Strong and rapid increases in the price level D) Increases in real net domestic product

Question

Quizplus · Accepted Answer

If the aggregate demand curve shifts beyond AD5, it typically indicates that the economy is operating beyond its full capacity, leading to demand-pull inflation without an increase in real GDP, as the economy cannot produce more than its potential output.

-Refer to the Above Figure