Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
True
B
False
Understanding the Answer
Let's break down why this is correct
Answer
When aggregate demand increases, it means that people and businesses want to buy more goods and services at every price level. If aggregate supply stays the same, there aren't more goods available to meet this higher demand. As a result, sellers can raise their prices because more buyers are competing for the same amount of products. This leads to a higher equilibrium price level in the economy. For example, if a popular toy becomes very desirable during the holiday season, more people will want to buy it, pushing up its price while the number of toys produced remains unchanged.
Detailed Explanation
When demand goes up but supply stays the same, prices usually rise. Other options are incorrect because Some might think that higher demand always means more output.
Key Concepts
Aggregate Demand
Equilibrium Price Level
Aggregate Supply
Topic
Aggregate Supply and Demand Analysis
Difficulty
easy level question
Cognitive Level
understand
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