If the growth rate of spending increases from 3% to 5%,then:
A) the inflation rate will rise 2%.
B) the growth rate of real output will rise 2%.
C) the aggregate demand curve will shift to the right.
D) the slope of the aggregate demand curve will increase.

Question

Quizplus · Accepted Answer

An increase in the growth rate of spending will shift the aggregate demand curve to the right as there will be more demand for goods and services in the economy. This will increase the level of output and prices, but it does not necessarily mean that the inflation rate will rise by a specific amount or that the slope of the aggregate demand curve will change.

If the Growth Rate of Spending Increases from 3% to 5%,then