If There Is an Unanticipated Increase in Aggregate Demand, Then

Multiple Choice

If there is an unanticipated increase in aggregate demand, then according to new classical economics, the economy will self-correct with a(n) :

A) Decrease in short-run aggregate supply, so output returns to its initial level, but the price level rises
B) Decrease in short-run aggregate supply, so output increases and the price level rises
C) Decrease in short-run aggregate supply, so output returns to its initial level and the price level falls
D) Increase in short-run aggregate supply, so output increases and the price level rises