If policymakers increase aggregate demand,then in the short run the price level
A)falls and unemployment rises.
B)and unemployment fall.
C)and unemployment rise.
D)rises and unemployment falls.

Question

Quizplus · Accepted Answer

When policymakers increase aggregate demand, it causes an increase in both output and prices in the short run, known as demand-pull inflation. As a result, the price level rises and unemployment falls, which is depicted in the Phillips curve. Therefore, choice D is the correct answer.

If Policymakers Increase Aggregate Demand,then in the Short Run the Price