Question

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.

Answer 1

D. an increase in potential GDP.

Step-by-step 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.