Question
17. A large increase in aggregate demand in an overheated economy will tend to: M Increase...

17. A large increase in aggregate demand in an overheated economy will tend to: M Increase the real GDP significantly N. Cause an increase in inflation rate O. Reduce the real GDP P. Decrease the nominal GDP
Answers
Option N
Explanation: when the economy is overheated, this means the actual output is larger than the potential output. In this situation, if aggregate demand increases further, it leads to even a higher price.
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