An increase in aggregate demand in the long run will most likely result in _____
A) a decrease in the price and output levels.
B) an increase in the price and output levels.
C) an increase in the price level and a decrease in the output level.
D) a decrease in the price level and an increase in the output level.
E) an increase in the price level but no change in the output level.

Question

Quizplus · Accepted Answer

In the long run, an increase in aggregate demand typically results in higher price levels due to inflationary pressures, but it does not change the output level because the economy adjusts to its full employment output.

An Increase in Aggregate Demand in the Long Run Will