Last year in the country of Union, the price level increased and real GDP increased. Such an outcome might have occurred because short- run aggregate supply and aggregate demand .
A) increased; did not change
B) increased; decreased
C) did not change; increased
D) decreased; decreased

Question

Quizplus · Accepted Answer

An increase in aggregate demand with no change in short-run aggregate supply can lead to higher price levels and increased real GDP, as demand outpaces supply, pushing prices up and increasing output.

Last Year in the Country of Union, the Price Level