Consider a graph with inflation rate in the vertical axis and real GDP in the horizontal axis and determine the false statement from the following statements.

Question

Quizplus · Accepted Answer

The AD (Aggregate Demand) curve represents the total demand for goods and services in an economy at different price levels, and its position is not directly affected by the inflation target rate. Instead, a higher inflation target could lead to adjustments in monetary policy, which might shift the AD curve, but not necessarily to the left. The direction of the shift would depend on the policy response.

Consider a Graph with Inflation Rate in the Vertical Axis