Refer to the diagram. The initial aggregate demand curve is AD1 and the initial aggregate supply curve is AS1. In the long run, demand-pull inflation is best shown as:      A)  a move from a to d.   B)  a shift of aggregate demand from AD1 to AD2 followed by a shift of aggregate supply from AS1 to AS2.   C)  a shift of aggregate supply from AS1 to AS2 followed by a shift of aggregate demand from AD1 to AD2.   D)  a move from d to b to a.

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter22: Inflation
Section: Chapter Questions
Problem 18RQ: What is deflation?
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Refer to the diagram. The initial aggregate demand curve is AD1 and the initial aggregate supply curve is AS1. In the long run, demand-pull inflation is best shown as: 

 
 

A) 

a move from a to d.

 

B) 

a shift of aggregate demand from AD1 to AD2 followed by a shift of aggregate supply from AS1 to AS2.

 

C) 

a shift of aggregate supply from AS1 to AS2 followed by a shift of aggregate demand from AD1 to AD2.

 

D) 

a move from d to b to a.

ASLR
AS2
AS,
P3
P2
AD2
P,
AD,
Q,
Real Output
Price Level
Transcribed Image Text:ASLR AS2 AS, P3 P2 AD2 P, AD, Q, Real Output Price Level
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