-Refer to the above diagram. Cost-push inflation can be illustrated by a: A) shift in the aggregate supply curve from AS₁ to AS₂. B) shift in the aggregate supply curve from AS₁ to AS₃. C) shift in the aggregate supply curve from AS₂ to AS₃. D) movement along the aggregate demand curve from e₁ to e₃.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when the aggregate supply curve shifts to the left, from AS₁ to AS₂, indicating a decrease in supply and an increase in prices.

-Refer to the Above Diagram