Which of the following will most likely occur as the result of an unanticipated increase in...
Which of the following will most likely occur as the result of an unanticipated increase in aggregate demand? a. an increase in output and a move to a higher price level b. an increase in prices and a long-run increase in output c. an increase in long-run aggregate supply (LRAS shifts to the right) d. a decrease in the natural rate of unemployment
Homework Answers
Ans is a) an increase in output and a move to a higher price level.
Explanation:
If the aggregate demand increases and it is not anticipated then the cycle will go as usual and the price will rise as price rises suppliers increases their production to earn more profit and this will lead to increase in output.
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