When aggregate demand shifts right along the short-run aggregate supply curve,unemployment
A)falls,so there are upward pressures on wages and prices.
B)falls,so there are downward pressures on wages and prices.
C)rises,so there are upward pressures on wages and prices.
D)rises,so there are downward pressures on wages and prices.

Question

Quizplus · Accepted Answer

When aggregate demand shifts right along the short-run aggregate supply curve, it leads to an increase in output and a decrease in unemployment. This creates an upward pressure on wages and prices as there is a higher demand for goods and services but the supply may not have increased yet to meet the demand. This can result in inflation and higher costs for businesses, leading to upward pressure on prices.

When Aggregate Demand Shifts Right Along the Short-Run Aggregate Supply