Refer to the diagram and assume that prices and wages are ﬂexible both upward and downward in the economy. In the extended AD-AS model,
A) demand-pull inﬂation would involve a rightward shift of curve A, followed by a rightward shift of curve C.
B) cost-push inﬂation would involve a rightward shift of curve A, followed by a leftward shift of curve C.
C) recession would involve a leftward shift of curve A, followed by a rightward shift of curve C.
D) recession would involve a rightward shift of curve D, followed by leftward shifts of curves A and C.

Question

Refer to the diagram and assume that prices and wages are ﬂexible both upward and downward in the economy. In the extended AD-AS model,
A) demand-pull inﬂation would involve a rightward shift of curve A, followed by a rightward shift of curve C. 
B) cost-push inﬂation would involve a rightward shift of curve A, followed by a leftward shift of curve C. 
C) recession would involve a leftward shift of curve A, followed by a rightward shift of curve C. 
D) recession would involve a rightward shift of curve D, followed by leftward shifts of curves A and C.

Quizplus · Accepted Answer

The Answer of  Refer to the diagram and assume that prices and wages are ﬂexible both upward and downward in the economy. In the extended AD-AS model,
A) demand-pull inﬂation would involve a rightward shift of curve A, followed by a rightward shift of curve C. 
B) cost-push inﬂation would involve a rightward shift of curve A, followed by a leftward shift of curve C. 
C) recession would involve a leftward shift of curve A, followed by a rightward shift of curve C. 
D) recession would involve a rightward shift of curve D, followed by leftward shifts of curves A and C.

Refer to the Diagram and Assume That Prices and Wages