-The figure above shows the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves for the U.S. economy. The economy is currently at point A. A cost-push rise in the price level will initially move the economy to point ___________and to point___________ .
A) C when the money prices of raw materials rise; D when aggregate demand increases
B) E when aggregate demand increases; D when the money prices of raw materials rise
C) B when aggregate demand decreases; C when the money prices of raw materials rise
D) F; A when the money prices of raw materials change

Question

-The figure above shows the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves for the U.S. economy. The economy is currently at point A. A cost-push rise in the price level will initially move the economy to point ___________and to point___________ .
A) C when the money prices of raw materials rise; D when aggregate demand increases 
B) E when aggregate demand increases; D when the money prices of raw materials rise 
C) B when aggregate demand decreases; C when the money prices of raw materials rise 
D) F; A when the money prices of raw materials change

Quizplus · Accepted Answer

A cost-push rise in the price level, such as an increase in the money prices of raw materials, will initially shift the short-run aggregate supply curve to the left, moving the economy from point A to point C. If aggregate demand increases, the economy would move to point D.

-The Figure Above Shows the Aggregate Demand, Short-Run Aggregate Supply