An increase in the aggregate demand for goods and services will result in an increase in the amount of output firms are willing to produce, and this increase in output is accompanied by:
A)a decrease in the inflation rate.
B)an increase in the inflation rate.
C)a decrease in nominal GDP
D)an increase in potential GDP.

Question

Quizplus · Accepted Answer

An increase in aggregate demand typically leads to higher output and higher prices, resulting in an increase in the inflation rate.

An Increase in the Aggregate Demand for Goods and Services