In the intermediate range of the aggregate supply curve, if government spending increases caused the aggregate demand curve to shift outwards, which of the following ismostlikely to occur?
a. The price level and real GDP will both rise.
b. The price level will not change, but real GDP will increase.
c. The price level will rise, but real GDP will not change.
d. Both the price level and real GDP will not change.
a
You might also like to view...
Using real GDP on the horizontal axis instead of real disposable income implies that a marginal propensity to consume 0.75 generates for every additional $100 of real GDP
A) $25 of additional saving. B) $56.25 of additional consumption spending. C) $25 of additional saving and taxes. D) $75 of additional real disposable income.
Goods that are produced this year, stored in inventories, and then sold to consumers next year
A) count in this year's GDP. B) count in next year's GDP. C) count in both this year's and next year's GDP. D) are not counted as a part of GDP.