Asked by Mohammed Yasser on Jun 04, 2024
Verified
If aggregate demand increases and as a result equilibrium real GDP and employment increase but the price level remains unchanged,we can assume that the aggregate demand curve
A) is vertical.
B) is horizontal.
C) intersects a vertical segment of the aggregate supply curve.
D) intersects a horizontal segment of the aggregate supply curve.
E) intersects an upward-sloping segment of the aggregate supply curve.
Aggregate Demand Curve
A graphical representation that shows the total amount of goods and services demanded at different price levels in an economy.
Equilibrium Real GDP
The level of Gross Domestic Product at which aggregate supply equals aggregate demand, resulting in no unintended inventory build-up or depletion.
- Acquire knowledge of how aggregate demand and supply interactions affect workforce employment and production outcomes.
- Determine the distinct intervals of the aggregate supply curve and their significance for economic strategy formulation.
Verified Answer
ZK
Zybrea KnightJun 06, 2024
Final Answer :
D
Explanation :
If equilibrium real GDP and employment increase but the price level remains unchanged, it suggests that there is excess capacity in the economy. This can only happen when the aggregate supply curve intersects a horizontal segment, indicating that the economy can produce more output without triggering inflation. Therefore, the aggregate demand curve intersects a horizontal segment of the aggregate supply curve.
Learning Objectives
- Acquire knowledge of how aggregate demand and supply interactions affect workforce employment and production outcomes.
- Determine the distinct intervals of the aggregate supply curve and their significance for economic strategy formulation.