Refer to the diagram below.Suppose that aggregate demand increased from AD₁to AD₂.For the price level to stay constant: A) the aggregate supply curve would have to shift rightward. B) the aggregate supply curve would have to shift leftward. C) real domestic output would have to remain constant. D) the aggregate supply curve would have to be vertical.

Question

Quizplus · Accepted Answer

If aggregate demand increases while the aggregate supply remains constant, there will be upward pressure on the price level. However, if the price level is to stay constant, there must be an increase in the quantity of goods and services supplied. This can only happen if the aggregate supply curve shifts rightward.

Refer to the Diagram Below