An initial increase in aggregate demand that is NOT followed by an increase in the quantity of money results in a long- run equilibrium with
A)a higher price level and an increased level of real GDP.
B)a higher price level but the same real GDP.
C)the same price level and a lower level of real GDP.
D)None of the above answers is correct.

Question

Quizplus · Accepted Answer

In the long run, without an increase in the money supply, the economy returns to its potential output, resulting in a higher price level but unchanged real GDP.

An Initial Increase in Aggregate Demand That Is NOT Followed