Given a downward-sloping aggregate demand curve,if short-run aggregate supply increases,real GDP must increase and nominal GDP must fall.

Question

Quizplus · Accepted Answer

If short-run aggregate supply increases, real GDP will increase and the price level will decrease. However, nominal GDP (which is equal to the product of real GDP and the price level) may either increase, decrease, or remain constant depending on the magnitude of the change in real GDP and the price level.

Given a Downward-Sloping Aggregate Demand Curve,if Short-Run Aggregate Supply Increases,real