(Figure: Shifting SRAS and AD) What economic event is represented if full-employment GDP occurs at point a?
A) recession
B) demand-pull inflation
C) cost-push inflation
D) deflation

Question

(Figure: Shifting SRAS and AD)  What economic event is represented if full-employment GDP occurs at point a?
A) recession 
B) demand-pull inflation 
C) cost-push inflation 
D) deflation

Quizplus · Accepted Answer

Full-employment GDP occurring at point a indicates that the economy is producing at its potential output, and any further increase in demand will lead to demand-pull inflation as prices rise due to the scarcity of goods and services.

(Figure: Shifting SRAS and AD) What Economic Event Is