Given an upward-sloping aggregate supply curve, an increase in aggregate demand results in a(n)
A) decrease in the price level and an increase in output
B) decrease in the price level and a decrease in output
C) increase in the price level and an increase in output
D) increase in the price level and a decrease in output

Question

Quizplus · Accepted Answer

An increase in aggregate demand, when the aggregate supply curve is upward sloping, leads to both an increase in the price level and an increase in output. This is because higher demand for goods and services pushes prices up, while producers respond by increasing output to meet the higher demand.

Given an Upward-Sloping Aggregate Supply Curve, an Increase in Aggregate