Which of the following would cause prices and real GDP to rise in the short run?
A)short-run aggregate supply shifts right
B)short-run aggregate supply shifts left
C)aggregate demand shifts right
D)aggregate demand shifts left

Question

Quizplus · Accepted Answer

An increase in aggregate demand would shift the aggregate demand curve to the right, causing both prices and real GDP to rise in the short run. This is because firms would increase production to meet the higher demand, leading to an increase in output (real GDP), but also potentially leading to higher prices due to increased demand for resources and inputs. An increase in short-run aggregate supply would also lead to an increase in real GDP, but would likely lead to decreased prices due to increased availability of resources and inputs. A shift to the left in either aggregate demand or short-run aggregate supply would lead to decreases in both prices and real GDP in the short run.

Which of the Following Would Cause Prices and Real GDP