Which of the following will most likely occur as the result of an unanticipated increase in aggregate demand that pushes output beyond long-run capacity?
A) an increase in the natural rate of unemployment
B) an increase in the real interest rate
C) a decrease in the real interest rate
D) a decrease in the general level of prices

Question

Quizplus · Accepted Answer

An unanticipated increase in aggregate demand that pushes output beyond long-run capacity typically leads to higher inflationary pressures, prompting central banks to raise real interest rates to control inflation.

Which of the Following Will Most Likely Occur as the Result