An increase in aggregate demand can lead to higher output and lower unemployment in the short run.Question 43Answera.Trueb.False
Question
An increase in aggregate demand can lead to higher output and lower unemployment in the short run.Question 43Answera.Trueb.False
Solution
a. True
An increase in aggregate demand can indeed lead to higher output and lower unemployment in the short run. This is because when demand for goods and services increases, companies typically respond by ramping up production, which often requires hiring more workers, thus reducing unemployment. However, this is a short-term effect. In the long run, if demand continues to outstrip supply, it can lead to inflation.
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