When the aggregate demand curve shifts rightward, the price level ________ and the unemployment rate ________.
A) increases; increases
B) increases; decreases
C) decreases; decreases
D) decreases; increases
E) does not change; does not change

Question

Quizplus · Accepted Answer

When the aggregate demand curve shifts rightward, there is an increase in demand for goods and services which leads to an increase in price levels. This increase in demand also creates job opportunities, meaning there is a decrease in unemployment rate. Therefore, Option B, which states that the price level increases and the unemployment rate decreases, is the best choice.

When the Aggregate Demand Curve Shifts Rightward, the Price Level