Output increases if aggregate demand _____ and aggregate supply _____.
A) increases; increases
B) increases; decreases
C) decreases; increases
D) decreases; decreases

Question

Quizplus · Accepted Answer

If aggregate demand increases, it means that consumers are willing and able to buy more goods and services, which encourages firms to produce more. If aggregate supply also increases, it means that firms are able to produce more output at every price level, which further increases the overall output in the economy. Therefore, both increasing aggregate demand and aggregate supply will lead to an increase in output.

Output Increases If Aggregate Demand _____ and Aggregate Supply _____

Output Increases If Aggregate Demand _ and Aggregate Supply _