As illustrated in an aggregate demand-aggregate supply diagram,if the economy is at full employment and aggregate demand increased

Question

Quizplus · Accepted Answer

When the economy is at full employment and aggregate demand increases, the aggregate supply curve is vertical or nearly vertical, indicating that output (real GDP) cannot increase significantly due to capacity constraints. Therefore, the primary effect of increased aggregate demand under these conditions is to raise the price level, while real GDP remains largely unchanged.

As Illustrated in an Aggregate Demand-Aggregate Supply Diagram,if the Economy