In a demand-pull inflation, the AD curve shifts___________ and the SAS curve shifts___________ .
A) leftward; leftward
B) rightward; rightward
C) leftward; rightward
D) rightward; leftward

Question

Quizplus · Accepted Answer

In a demand-pull inflation, the demand for goods and services increases which leads to an increase in the AD (aggregate demand) curve. This shift causes the price level to increase and the SAS (short-run aggregate supply) curve to shift leftward due to the increase in the cost of production. Therefore, the correct answer is D.

In a Demand-Pull Inflation, the AD Curve Shifts___________ and the SAS