Increases in the price level accompanied by reductions in total real output mean that the economy is experiencing
A) leftward shifts in the aggregate demand curve.
B) full employment.
C) technological advances leading to increased productivity.
D) leftward shifts in the Phillips curve.
E) supply-side inflation.

Question

Quizplus · Accepted Answer

Increases in the price level accompanied by reductions in total real output are indicative of supply-side inflation. This occurs when the aggregate supply curve shifts to the left, leading to higher prices and lower output, often due to increased production costs or supply constraints.

Increases in the Price Level Accompanied by Reductions in Total