What happens if the aggregate demand curve shifts to the right?
A)The price level will rise.
B)Real GDP will increase.
C)Both A and B will occur.
D)Aggregate supply will also rise.

Question

Quizplus · Accepted Answer

When the aggregate demand curve shifts to the right, it means that consumers, businesses, and/or the government are demanding a higher quantity of goods and services at every price level. As a result, firms increase their production to meet the higher demand, leading to an increase in real GDP (output) of the economy. This increase in demand for goods and services will also put upward pressure on prices, causing the price level to rise. Therefore, both A and B will occur. There is no direct relationship between the shift in the aggregate demand curve and the movement of the aggregate supply curve.

What Happens If the Aggregate Demand Curve Shifts to the Right