High inflation plus low economic growth is associated with:
A) a rightward shift of the AD curve.
B) a leftward shift of the AD curve.
C) a leftward shift of the SRAS curve.
D) an exchange rate shock.
E) both c and d

Question

Quizplus · Accepted Answer

High inflation and low economic growth are indicative of a stagnant economy. As a result, there is less demand for goods and services, causing a leftward shift of the aggregate demand (AD) curve. This leads to a decrease in prices and output levels in the short run, causing inflation to decrease as well.

High Inflation Plus Low Economic Growth Is Associated With