In a scenario where a country is recovering from a recession, how would an increase in aggregate demand likely affect the equilibrium price level and output?

When a country is recovering from a recession, an increase in aggregate demand means that people and businesses want to buy more goods and services. This increased demand can lead to higher prices because when more people want something, sellers can charge more for it. At the same time, businesses may respond to this higher demand by producing more, which can increase the overall output of the economy. For example, if a car company sees more customers wanting to buy cars, it will likely produce more cars, leading to more jobs and higher income for workers. Overall, the combination of higher prices and increased output helps the economy recover from the recession.