Because the aggregate supply curve rises more steeply as the economy approaches full employment,
A)Inflation tends to accelerate.
B)The recessionary GDP gap becomes larger.
C)Aggregate demand shifts to the left.
D)It becomes easier to reach full employment.

Question

Quizplus · Accepted Answer

As the economy approaches full employment, wages and prices tend to rise at a faster rate due to decreased availability of workers and increased demand for goods and services. This leads to increased production costs, causing inflation to accelerate.

Because the Aggregate Supply Curve Rises More Steeply as the Economy