C. The real level of output will rise, and the price level will rise
When both short-run and long-run aggregate supply increase, the economy can produce more goods and services at the same price level. This results in an increase in the real level of output. However, because the increase in aggregate supply leads to an increase in overall production, the price level will also rise. This is represented by a movement along the aggregate demand curve.
an economy starts out in short-run and long-run equilibrium. If both short-run and long-run aggregate supply increase, so that the economy remains in equilibrium
A. The aggregate demand curve will have to shift
B. The real level of output will fall, and the price level will rise
C. The real level of output will rise, and the price level will rise
D. The real level of output will rise, and the price level will fall
E. The real level of output will rise, and the nominal level will fall
1 answer
1 answer