When PAE increases we expect that economy will be at ______ levels of equilibrium GDP.
A) lower
B) higher
C) constant
D) cycling

Question

Quizplus · Accepted Answer

When PAE increases, it will lead to an increase in aggregate demand in the economy. This will result in firms producing more goods and services to meet the higher demand, thereby increasing the equilibrium GDP. Therefore, we can expect that the economy will be at higher levels of equilibrium GDP.

When PAE Increases We Expect That Economy Will Be at ______