-The figure above shows the aggregate demand, short- run aggregate supply, and long- run aggregate supply curves for the Australian 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)B when aggregate demand decreases; C when the money prices of raw materials rise
B)F; A when the money prices of raw materials change
C)C when the money prices of raw materials rise; D when aggregate demand increases
D)E when aggregate demand increases; D when the money prices of raw materials rise

Question

-The figure above shows the aggregate demand, short- run aggregate supply, and long- run aggregate supply curves for the Australian 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)B when aggregate demand decreases; C when the money prices of raw materials rise 
B)F; A when the money prices of raw materials change 
C)C when the money prices of raw materials rise; D when aggregate demand increases 
D)E when aggregate demand increases; D when the money prices of raw materials rise

Quizplus · Accepted Answer

A cost-push rise in the price level is typically due to an increase in the cost of production, such as a rise in the money prices of raw materials. This would initially move the economy to point C. If aggregate demand increases, it would then move to point D.

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