In the long run,an increase in aggregate demand will lead to
A)A higher price level and an increase in real GDP.
B)A higher price level only.
C)An increase in real GDP only.
D)A decrease in real GDP.

Question

Quizplus · Accepted Answer

In the long run, an increase in aggregate demand is expected to lead to a higher price level only, as the economy's output adjusts to its potential output or full employment level, making real GDP unchanged in the long run.

In the Long Run,an Increase in Aggregate Demand Will Lead