Arrange the following steps in the correct sequence to analyze the impact of an increase in aggregate demand on the economy's equilibrium output and price level: A) Identify the new equilibrium price level and output. B) Determine the initial position of aggregate demand and supply. C) Shift the aggregate demand curve to the right. D) Analyze the short-run and long-run effects on the economy.

To analyze the impact of an increase in aggregate demand on the economy's equilibrium output and price level, we start by determining the initial position of aggregate demand and supply. Once we understand where the economy is currently, we can shift the aggregate demand curve to the right to reflect the increase in demand. After this shift, we identify the new equilibrium price level and output that result from the change. Finally, we analyze the short-run and long-run effects on the economy, considering how prices and output may adjust over time. For example, if consumer spending increases, the aggregate demand curve moves right, leading to higher prices and output in the short run, but may stabilize differently in the long run.