Exhibit 14-8 Aggregate demand and supply

-In Exhibit 14-8,when aggregate demand shifts from AD₄ to AD₅,the economy experiences:
A) cost push-inflation.
B) cost-pull inflation.
C) demand-push inflation.
D) demand-pull inflation.
E) price-pull inflation.

Question

Exhibit 14-8 Aggregate demand and supply
 
-In Exhibit 14-8,when aggregate demand shifts from AD₄ to AD₅,the economy experiences:
A) cost push-inflation. 
B) cost-pull inflation. 
C) demand-push inflation. 
D) demand-pull inflation. 
E) price-pull inflation.

Quizplus · Accepted Answer

When aggregate demand shifts from AD₄ to AD₅, the economy experiences demand-pull inflation. This is because the increase in aggregate demand creates excess demand for goods and services, leading to higher prices and inflationary pressure.

Exhibit 14-8 Aggregate Demand and Supply