-Refer to the above figure. If the aggregate demand curve shifts beyond AD₅, then the economy will experience
A)demand-pull inflation.
B)cost-push inflation.
C)structural inflation.
D)stagflation.

Question

-Refer to the above figure. If the aggregate demand curve shifts beyond AD₅, then the economy will experience
A)demand-pull inflation. 
B)cost-push inflation. 
C)structural inflation. 
D)stagflation.

Quizplus · Accepted Answer

When the aggregate demand curve shifts beyond AD₅, it indicates an increase in overall demand in the economy, leading to demand-pull inflation, where prices rise due to higher demand.

-Refer to the Above Figure