When aggregate supply increases, all of the following result except:
A) equilibrium level of real GDP increases
B) unemployment decreases
C) the price level decreases
D) cost-push inflation results
E) none - all of these result when aggregate demand increases

Question

Quizplus · Accepted Answer

An increase in aggregate supply would result in a decrease in the price level, an increase in equilibrium level of real GDP, and a decrease in unemployment. However, cost-push inflation occurs when there is a decrease in aggregate supply, not an increase. Option E is not relevant to the question, as it refers to the effects of an increase in aggregate demand. Therefore, the correct answer is D.

When Aggregate Supply Increases, All of the Following Result Except