Short-run movements in inflation and output are ultimately attributed to changes in:
A) aggregate demand.
B) aggregate supply.
C) foreign policy.
D) aggregate demand and aggregate supply.

Question

Quizplus · Accepted Answer

Short-run movements in inflation and output are attributed to changes in both aggregate demand and aggregate supply, so the best choice is D. Foreign policy may affect economic conditions in the long run, but it is not the primary driver of short-term fluctuations in inflation and output.

Short-Run Movements in Inflation and Output Are Ultimately Attributed to Changes