Other things equal, an increase in aggregate supply will cause:
A)a decrease in equilibrium real GDP and a decrease in the equilibrium price level.
B)an economic contraction.
C)an increase in equilibrium real GDP and an increase in the equilibrium price level.
D)cost-push inflation.
E)a reduction in unemployment and a decline in inflation.

Question

Quizplus · Accepted Answer

An increase in aggregate supply typically leads to higher real GDP and lower price levels, reducing unemployment and inflation.

Other Things Equal, an Increase in Aggregate Supply Will Cause