Over the last twenty years, real GDP in the U.S. economy has increased and there has been inflation. This indicates that
A) aggregate demand has increased while aggregate supply has been constant.
B) aggregate demand has been constant while aggregate supply has increased.
C) aggregate demand has increased more than aggregate supply.
D) aggregate demand has increased less than aggregate supply.

Question

Quizplus · Accepted Answer

The increase in real GDP indicates that there has been an increase in aggregate supply. However, the presence of inflation suggests that the increase in aggregate demand has exceeded the increase in aggregate supply, ultimately leading to a rise in prices. Therefore, the best choice is C, which states that aggregate demand has increased more than aggregate supply.

Over the Last Twenty Years, Real GDP in the U