A demand- pull inflation can be described as shifts in the AD curve and shifts in the SAS curve.
A) rightward; leftward
B) leftward; leftward
C) leftward; rightward
D) rightward; rightward

Question

Quizplus · Accepted Answer

A demand-pull inflation occurs when there is an increase in aggregate demand (AD). This causes the AD curve to shift rightward. As demand increases, firms in the economy increase their production, resulting in a leftward shift of the short-run aggregate supply (SAS) curve. Therefore, the correct answer is A, as there is a rightward shift in the AD curve and a leftward shift in the SAS curve.

A Demand- Pull Inflation Can Be Described as Shifts in the AD