An Increase in Aggregate Demand Results in

question 100

Multiple Choice

An increase in aggregate demand results in

• A) a higher unemployment rate and a lower price level.
• B) a lower unemployment rate and a higher price level.
• C) an increase in real GDP and a decrease in the price level.
• D) a decrease in real GDP and a decrease in the price level.
• E) a lower unemployment rate and a lower price level.

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Definitions:

Price Level

An index that measures the average of current prices across the entire spectrum of goods and services produced in the economy compared to a base year.

Aggregate Supply Curve

A diagram that exhibits the comprehensive volume of goods and services that economic producers are ready and capable of supplying at assorted price levels.

Aggregate Demand Curve

A graph representing the total demand for goods and services within an economy at various price levels.

Government Spending

The total amount of public expenditure by government agencies and institutions.