If Both Aggregate Demand and Short-Run Aggregate Supply Increase at the Same

question 37

Multiple Choice

If both aggregate demand and short-run aggregate supply increase at the same time,

• A) the price level increases, but the change in equilibrium income is unknown.
• B) both the price level and equilibrium income increase.
• C) both the price level and equilibrium income decline.
• D) equilibrium income increases, but the change in the price level is unknown.
• E) the change in both equilibrium income and the price level is ambiguous.

---

Definitions:

Entrepreneur

An individual who undertakes the creation, organization, and ownership of an innovative business with potential for growth and financial reward.

Franchising

A business model that allows individuals to operate their own outlets of a larger chain, sharing in the brand, products, and operational support.

Royalties

Payments made to the original creators or owners of intellectual property for the right to use their work.

Franchisor

A business entity that grants the right to use its brand, products, and operational model to an individual or company (franchisee) in exchange for a fee.