For an economy starting at potential output,an increase in autonomous planned aggregate expenditure in the short run results in a(n)

Question

Quizplus · Accepted Answer

An increase in autonomous planned aggregate expenditure in the short run leads to an increase in aggregate demand, which will cause an expansionary output gap. This is because the economy is operating beyond its potential output level, leading to price and wage increases, as well as shortages due to the inability of firms to produce goods and services at the required pace.

For an Economy Starting at Potential Output,an Increase in Autonomous