In the dynamic aggregate demand and aggregate supply model, the rate of inflation will increase if:
A)AD shifts faster than AS.
B)AD shifts slower than AS.
C)AS shifts faster than AD.
D)the price level rises.

Question

Quizplus · Accepted Answer

When AD (Aggregate Demand) shifts faster than AS (Aggregate Supply), it indicates that demand is increasing more rapidly than supply, leading to higher prices and thus, an increase in the rate of inflation.

In the Dynamic Aggregate Demand and Aggregate Supply Model, the Rate