-Refer to the above figure. If the aggregate demand curve shifts beyond AD5, which of the following would we NOT expect?
A) strong demand-pull inflation
B) no increase in real Gross Domestic Product (GD
C) strong and rapid increases in the price level
D) increases in real net domestic product

Question

-Refer to the above figure. If the aggregate demand curve shifts beyond AD5, which of the following would we NOT expect?
A) strong demand-pull inflation 
B) no increase in real Gross Domestic Product (GD
C) strong and rapid increases in the price level 
D) increases in real net domestic product

Quizplus · Accepted Answer

When the aggregate demand curve shifts beyond AD5, the economy is likely operating beyond its full capacity, leading to demand-pull inflation. This situation typically results in strong inflationary pressures without a corresponding increase in real GDP, as the economy is already at or near full employment. Therefore, we would not expect increases in real net domestic product.

-Refer to the Above Figure