The following question are based on the following diagram:

-If aggregate demand shifts to the right
A) unemployment increases.
B) price levels fall.
C) real output rises.
D) both the demand for money and interest rates fall.
E) consumers or investors must have decided to decrease their spending.

Question

The following question are based on the following diagram:
 
-If aggregate demand shifts to the right
A) unemployment increases. 
B) price levels fall. 
C) real output rises. 
D) both the demand for money and interest rates fall. 
E) consumers or investors must have decided to decrease their spending.

Quizplus · Accepted Answer

If aggregate demand shifts to the right, it means that there is an increase in demand for goods and services in the economy. This would lead to an increase in real output as firms would increase production to meet the higher demand. A shift in aggregate demand does not affect unemployment directly, and it may lead to an increase in prices (inflation) rather than a fall. The demand for money and interest rates may be affected, but the direction of the change cannot be determined from the diagram. Decrease in consumer or investor spending would cause a leftward shift in aggregate demand, not a rightward shift.

The Following Question Are Based on the Following Diagram