The change in AD is the same size as the change in equilibrium GDP if prices are held constant.
The change in AD is equal to the change in equilibrium GDP if the AS curve is horizontal over a particular range.

Question

Quizplus · Accepted Answer

This statement is true according to the basic Keynesian model, which assumes a horizontal AS curve in the short run. In this scenario, changes in AD directly affect equilibrium GDP without a corresponding change in prices. However, if the AS curve is upward sloping, changes in AD will also result in changes in prices, affecting the size of the change in equilibrium GDP.

The Change in AD Is the Same Size as the Change