An economy is in long-run equilibrium and the price level is 100 in the figure above. Aggregate demand increases and the aggregate demand curve shifts to AD₁. If the increase in aggregate demand is expected, then the inflation rate is A) 0 percent a year. B) 10 percent a year. C) 20 percent a year. D) More than 20 percent a year.

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The Answer of An economy is in long-run equilibrium and the price level is 100 in the figure above. Aggregate demand increases and the aggregate demand curve shifts to AD₁. If the increase in aggregate demand is expected, then the inflation rate is A) 0 percent a year. B) 10 percent a year. C) 20 percent a year. D) More than 20 percent a year.

An Economy Is in Long-Run Equilibrium and the Price Level