In the long run,an increase in aggregate demand
A)increases the price level and real output,but the effect on the price level is larger
B)increases the price level and real output,but the effect on output is larger
C)affects only real output
D)affects only the price level
E)has no effect at all

Question

Quizplus · Accepted Answer

In the long run, an increase in aggregate demand affects only the price level because the economy is at full employment, and output is determined by factors of production, not demand.

In the Long Run,an Increase in Aggregate Demand