During a demand-pull inflation, if the Fed tries to maintain a level of real GDP above potential GDP, the AD curve will _{--------------------} and the AS curve will _{--------------------}. A)shift rightward continuously; shift rightward continuously B)not shift; shift rightward continuously C)shift rightward continuously; not shift D)shift rightward continuously; shift leftward continuously E)shift rightward once; shift rightward continuously

Question

Quizplus · Accepted Answer

If the Fed tries to maintain real GDP above potential GDP, the AD curve will shift rightward continuously due to increased demand, while the AS curve will shift leftward continuously as resources become more scarce and costs rise, leading to inflation.

During a Demand-Pull Inflation, If the Fed Tries to Maintain