An economic policy initiative results in the AD curve shifting to the right.As a result,
A) the price level will rise.
B) the price level will stay constant.
C) the price level will fall.
D) Real GDP will rise in the short run.
E) a and d

Question

Quizplus · Accepted Answer

When the AD curve shifts to the right due to an economic policy initiative, both the price level and real GDP are expected to rise in the short run. The increase in aggregate demand leads to a higher level of output and employment, which in turn puts upward pressure on the price level due to increased demand for goods and services. Therefore, choice A is also correct. Option B and C are incorrect because the AD curve shift will not keep the price level constant nor lead to a price level fall.

An Economic Policy Initiative Results in the AD Curve Shifting