Which of the following reflects an increase in the average level of prices of go

Question

Which of the following reflects an increase in the average level of prices of goods and services? Full employment Unemployment maxro equilibrium Inflation The Aggregate Demand Curve: show s the various levels of expenditures that the economy will engage in at different average price levels show s the various levels of expenditures that the economy will engage in at different average price levels implies a positive relationship between inflation and unemployment has the sample slope as aggregate supply curve has a positive slope

Explanation / Answer

18. Infaltion is the increase in the overall or average price level. Hence the correct option is D

19. The aggregate demand curve AD is downward sloping showing the fact that, to restore equilibrium, a higher price must cause a reduction in the equilibrium level of income. The slope is negative and is different than that of Aggregate supply. It in a way, exhibits a relationship between price level and expenditure in terms of GDP so correct option is A.

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