If the prices of crucial raw materials increase,
A) stagflation will probably occur.
B) the short- run aggregate supply curve shifts leftward.
C) a cost- push inflation could occur depending on the behavior of the Federal Reserve.
D) All of the above answers are correct.

Question

Quizplus · Accepted Answer

An increase in raw material prices can lead to stagflation (A), shift the short-run aggregate supply curve leftward (B), and potentially cause cost-push inflation depending on monetary policy (C).

If the Prices of Crucial Raw Materials Increase