Answer: e. Real GDP increases and the price level falls.
Explanation:
When the Aggregate Supply increases in the economy, there will be more goods and services for people to patronize. This will lead to a fall in price as per the rules of demand and supply so the general price level will fall as aggregate measures affect the entire economy.
At the same time, real GDP will increase because a higher Aggregate supply means that more goods and services are being produced in the economy which is how Real GDP increases.
