An increase in aggregate demand will cause an increase in both Real GDP and the price level.

Name: An increase in aggregate demand will cause an increase in both Real GDP and the price level.
Brand: Quizplus
Rating: 4.9 (41 reviews)

Question

Quizplus · Accepted Answer

When aggregate demand increases, there is more demand for goods and services, which leads to an increase in production and employment, which in turn increases Real GDP. As the demand for goods and services rises, so do their prices, resulting in an increase in the price level.

An Increase in Aggregate Demand Will Cause an Increase in Both