An increase in aggregate demand in the economy will have what effect on macroeconomic equilibrium in the long run?
A)The price level will fall,and the level of GDP will rise.
B)The price level will fall,and the level of GDP will fall.
C)The price level will rise,and the level of GDP will fall.
D)The price level will rise,and the level of GDP will be unaffected.

Question

Quizplus · Accepted Answer

In the long run, an increase in aggregate demand typically results in a higher price level while the level of real GDP remains unaffected due to the economy's return to its potential output or full employment level.

An Increase in Aggregate Demand in the Economy Will Have