Exhibit 14-2 Aggregate demand and supply

-In Exhibit 14-2,when aggregate demand shifts from AD₄ to AD₅,the economy experiences:
A)cost-push inflation.
B)cost-pull inflation.
C)demand-push inflation.
D)demand-pull inflation.
E)price-pull inflation.

Question

Exhibit 14-2 Aggregate demand and supply
 
-In Exhibit 14-2,when aggregate demand shifts from AD₄ to AD₅,the economy experiences:
A)cost-push inflation. 
B)cost-pull inflation. 
C)demand-push inflation. 
D)demand-pull inflation. 
E)price-pull inflation.

Quizplus · Accepted Answer

Demand-pull inflation occurs when there is an increase in aggregate demand, which leads to an increase in the price level. In Exhibit 14-2, when aggregate demand shifts from AD₄ to AD₅, the economy experiences demand-pull inflation.

Exhibit 14-2 Aggregate Demand and Supply