Asked by Charles Myles on Jun 20, 2024
Verified
An increase in aggregate demand in the long run will most likely result in:
A) a decrease in price and output levels.
B) an increase in price and output levels.
C) an increase in the price level and a decrease in output.
D) a decrease in the price level and an increase in output.
E) an increase in the price level but no change in output.
Price Level
The summarised price average of every good and service within the economic domain.
Aggregate Demand
Full economic demand for all types of goods and services, calculated at a unified price level throughout a chosen period.
Output Levels
Output levels refer to the quantity of goods and services produced by an economy or firm during a specific period.
- Apprehend the influence of aggregate demand on setting the long-run price level and output.
Verified Answer
BG
Briana GarnicaJun 22, 2024
Final Answer :
E
Explanation :
In the long run, an increase in aggregate demand typically results in higher price levels due to inflationary pressures, but it does not change the output level because the economy adjusts to its full employment output.
Learning Objectives
- Apprehend the influence of aggregate demand on setting the long-run price level and output.