If the current price level was such that the aggregate quantity demanded exceeded the aggregate quantity supplied, we would expect:
A)inflation to occur.
B)the aggregate demand curve to shift rightward.
C)the aggregate demand curve to shift leftward.
D)the ratchet effect to be applicable.

Question

Quizplus · Accepted Answer

If the aggregate quantity demanded exceeds the aggregate quantity supplied, there is excess demand in the market. This leads to a situation where buyers compete for goods, causing the prices to rise. The rise in prices leads to inflation.

If the Current Price Level Was Such That the Aggregate