If There Is an Unanticipated Increase in Aggregate Demand, Then

question 100

Multiple Choice

If there is an unanticipated increase in aggregate demand, then according to new classical economics, the economy will self-correct with a(n)

• A) decrease in short-run aggregate supply, so output returns to its initial level but the price level rises.
• B) decrease in short-run aggregate supply, so output increases and the price level rises.
• C) decrease in short-run aggregate supply, so output returns to its initial level and the price level falls.
• D) increase in short-run aggregate supply, so output increases and the price level rises.

---

Definitions:

Container

Any item that can hold materials, products, or substances, preventing their escape or entry of others.

Compressed

Reduced in volume as a result of applied pressure.

Atm

Standard atmosphere, a unit of pressure defined as 101,325 Pa; commonly used as a reference pressure in physics and meteorology.

Container

An object used to hold, store, or transport items, ranging from simple boxes to large shipping containers.