(Figure: Shifting SRAS and AD) What economic event is represented if full-employment GDP occurs at point a?

Name: (Figure: Shifting SRAS and AD) What economic event is represented if full-employment GDP occurs at point a?
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Question

(Figure: Shifting SRAS and AD)  What economic event is represented if full-employment GDP occurs at point a?

Quizplus · Accepted Answer

Full-employment GDP occurring at point a indicates that the economy is producing at its potential output, and any further increase in demand will lead to demand-pull inflation as prices rise due to the scarcity of goods and services.

(Figure: Shifting SRAS and AD) What Economic Event Is