An increase in the aggregate demand for goods and services will result in an increase in the amount of output firms are willing to produce, and this increase in output is accompanied by:

A. a decrease in the inflation rate.

B. an increase in the inflation rate.

C. a decrease in nominal GDP

D. an increase in potential GDP.

Question

Business

Sugar

23 August, 19:54

An increase in the aggregate demand for goods and services will result in an increase in the amount of output firms are willing to produce, and this increase in output is accompanied by:

A. a decrease in the inflation rate.

B. an increase in the inflation rate.

C. a decrease in nominal GDP

D. an increase in potential GDP.

+2

Answers (1)

Know the Answer?

Ryland Barker · Answer 1

D. an increase in potential GDP.

Explanation:

when the aggregate demand increases and output also increases, the potential GDP increases as well because the GDP measures the value of gross domestic products produced in an economy in a period of time.

it also means that an economy can produce more, and the potencial GDP will show that.