Along the classical or vertical range of the aggregate supply curve, an increase in the aggregate demand curve will increase:
a. both the price level and real GDP.
b. only real GDP.
c. only the price level.
d. real GDP and reduce the price level.
Question 2
If the economy is experiencing an inflationary gap, Keynesian economists advocate allowing flexible wages to shift the short-run aggregate supply curve (SRAC) upward and restore full employment.
a. True
b. False
Indicate whether the statement is true or false
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