If higher GDP stems from an increase in aggregate demand, then it is likely that:
A) the level of inﬂation will also increase.
B) aggregate supply will decrease.
C) investments in infrastructure will reduce.
D) unemployment rate will also increase.

Question

Quizplus · Accepted Answer

When aggregate demand increases, it often leads to higher GDP and can cause inflation to rise as well, due to increased spending and demand for goods and services outpacing supply.

If Higher GDP Stems from an Increase in Aggregate Demand