Over the horizontal range of the economy's AS curve (assuming such a range exists), a rightward shift of the AD curve will result in
A)a decrease in both real GDP and prices.
B)an increase in both real GDP and prices.
C)an increase in real GDP and no change in prices.
D)a decrease in real GDP but no change in prices.
E)an increase in prices and no change in real GDP.

Question

Quizplus · Accepted Answer

In the horizontal range of the AS curve, the economy is operating below full capacity, so an increase in AD leads to higher real GDP without affecting the price level.

Over the Horizontal Range of the Economy's AS Curve (Assuming