Figure 14.2 -Using Figure 14.2,a shift in aggregate demand from AD₃ to AD₄ will cause,ceteris paribus: A) An increase in real output and an increase in the price level. B) An increase in real output,but no change in the price level. C) An increase in the price level,but no change in real output. D) A decrease in the price level,but no change in real output.

Question

Quizplus · Accepted Answer

A shift in aggregate demand to the right (from AD₃ to AD₄) typically results in both an increase in real output and an increase in the price level, assuming other factors remain constant (ceteris paribus). This is because higher demand leads to more production and can also cause prices to rise due to increased demand for goods and services.