If aggregate demand increases in the intermediate range of the aggregate supply curve then the:
A) price level rises and real GDP falls.
B) price level rises and real GDP rises.
C) price level falls and real GDP falls.
D) price level falls and real GDP rises.

Question

Quizplus · Accepted Answer

When aggregate demand increases in the intermediate range of the aggregate supply curve, both price level and real GDP will rise. This is because the economy is able to produce more output due to available resources, leading to an increase in real GDP, while higher demand puts upward pressure on prices. Therefore, B is the correct choice.

If Aggregate Demand Increases in the Intermediate Range of the Aggregate