An unexpected increase in aggregate demand
A) will reduce the price level.
B) will increase the average duration of unemployment.
C) will reduce the unemployment rate.
D) will increase real GDP, but will not affect the rate and duration of unemployment.

Question

Quizplus · Accepted Answer

An unexpected increase in aggregate demand will lead to an increase in output and production, which in turn will increase hiring and decrease unemployment. Therefore, the unemployment rate will be reduced.

An Unexpected Increase in Aggregate Demand