If society wants aggregate demand to increase without changes in the price level, then there must be
A) a gap between full employment and the current level of real GDP and an increase in autonomous spending.
B) an increase in autonomous spending combined with an increase in the marginal propensity to save.
C) an increase in autonomous saving so that autonomous investment spending can increase.
D) an increase in autonomous spending and a horizontal short-run aggregate supply curve.

Question

Quizplus · Accepted Answer

An increase in autonomous spending will shift the aggregate demand curve to the right. If the short-run aggregate supply curve is horizontal, the increase in demand will not affect the price level, allowing for an increase in real GDP without inflation.

If Society Wants Aggregate Demand to Increase Without Changes in the Price