Graphically,what happened to the aggregate demand curve during World War II?
A)It did not shift,but the capacity of the economy increased thus shifting the aggregate supply curve to the left.
B)It did not shift since the economy was already at capacity.
C)It shifted to the right leading to a big increase in real GDP but to no change in the price level.
D)It shifted to the right thus causing an inflationary gap.
E)It shifted to the left since a big portion of expenditures was diverted to military spending.

Question

Quizplus · Accepted Answer

During World War II, the aggregate demand curve shifted to the right due to increased government spending on the war effort, leading to higher demand for goods and services. This shift caused an inflationary gap, where demand exceeded the economy's capacity to produce, leading to inflation.

Graphically,what Happened to the Aggregate Demand Curve During World War