Question
For any increase in aggregate demand, the resulting increase in real output will become smaller as the increase in Blank______ becomes greater.
Multiple choice question.
aggregate supply
the price level
interest rates
the level of investment spending
Multiple choice question.
aggregate supply
the price level
interest rates
the level of investment spending
Answers
GPT-4o mini
The correct answer is **the price level**.
As aggregate demand increases, if the price level rises significantly, the increase in real output tends to diminish, leading to a smaller increase in real output. This concept is tied to the short-run aggregate supply curve, which becomes steeper as the economy approaches its potential output.
As aggregate demand increases, if the price level rises significantly, the increase in real output tends to diminish, leading to a smaller increase in real output. This concept is tied to the short-run aggregate supply curve, which becomes steeper as the economy approaches its potential output.