If there is an unanticipated increase in aggregate demand, which of the following is most likely to occur?
A) a reduction in the price level
B) an increase in the rate of unemployment
C) an increase in employment
D) an expansion in the federal budget deficit

Question

Quizplus · Accepted Answer

An unanticipated increase in aggregate demand would lead to an increase in production and output. In order to meet the increased demand, firms would need to hire more workers, leading to an increase in employment. A reduction in price level or an increase in unemployment is unlikely in this scenario. An expansion in the federal budget deficit is not necessarily related to an increase in aggregate demand.

If There Is an Unanticipated Increase in Aggregate Demand, Which