An increase in aggregate demand in the long run will most likely result in:
A)a decrease in price and output levels.
B)an increase in price and output levels.
C)an increase in the price level and a decrease in output.
D)a decrease in the price level and an increase in output.
E)an increase in the price level but no change in output.

Question

Quizplus · Accepted Answer

In the long run, an increase in aggregate demand typically results in higher price levels due to inflationary pressures, but it does not change the output level because the economy adjusts to its full employment output.

An Increase in Aggregate Demand in the Long Run Will