Answered

In the classical conception of
macroequilibrium, in the long-
run, any increase in aggregate
demand will result in which of
the following?
A. unemployment
B. demand-pull inflation
C. deflation
D. cost-push inflation

Verified Answer :

GinnyAnswer

Final answer:

In the neoclassical model, any increase in aggregate demand leads to demand-pull inflation, resulting in a rise in the price level while real GDP and unemployment rates remain unchanged in the long run.


Explanation:

In the neoclassical model, when there is a rapid increase in aggregate demand, in the long run, it leads to inflationary pressures only. This means that any increase in aggregate demand will result in demand-pull inflation, causing the price level to rise but real GDP and the rate of unemployment stay constant, adjusting to their natural rates.


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