Assuming the price level has not changed, how would an increase in the aggregate demand affect real GDP?
A) It decreases.
B) It increases.
C) It only changes with changes in imports.
D) It only changes with changes in exports.

Question

Quizplus · Accepted Answer

An increase in aggregate demand leads to an increase in the overall demand for goods and services in the economy, which in turn leads to an increase in production and hence an increase in real GDP. This assumes that the economy is operating below full capacity and that there is no increase in the price level.

Assuming the Price Level Has Not Changed, How Would an Increase