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practice testMultiple Choice

Practice Test

Question 1 • Economics

What is likely to happen if a new aggregate demand curve moves to the right?

Answer
A
Prices would rise, and output would drop in the long run.
B
Prices would rise, and output would drop in the short run.
C
Prices and output would drop, and the equilibrium point will stay the same.
D
Prices and output would rise, and the equilibrium point will change.

Explanation

A rightward shift in aggregate demand means buyers want more goods and services at each price level. In the short run, this raises both the price level and real output, moving the economy to a new equilibrium point. Therefore, the correct choice is “Prices and output would rise, and the equilibrium point will change.”

AI-written and checked against the verified answer.

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