The effect of a positive demand shock is to
A)decrease the level of aggregate demand.
B)cause prices to rise.
C)decrease the firm's cost of producing at every level of output.
D)decrease the level of employment.

Question

Quizplus · Accepted Answer

A positive demand shock causes an increase in demand, which leads to an increase in prices as the quantity demanded exceeds the quantity supplied.

The Effect of a Positive Demand Shock Is to