Demand-side inflations indicate that the aggregate demand curve is shifting to the right along the ________ portion of an aggregate supply curve.
A) horizontal
B) downward-sloping
C) upward-sloping
D) backward-bending
E) rightward-shifting

Question

Quizplus · Accepted Answer

Demand-side inflations occur when there is an increase in aggregate demand, leading to an increase in prices and output. This shift in aggregate demand curve occurs along the upward-sloping portion of the aggregate supply curve, as firms are able to increase output in response to the increased demand, but only at higher prices. Therefore, the correct choice is C.

Demand-Side Inflations Indicate That the Aggregate Demand Curve Is Shifting