As aggregate demand shifts right along the aggregate supply curve,
A)inflation and unemployment are higher.
B)inflation is higher and unemployment is lower.
C)unemployment is higher and inflation is lower.
D)unemployment and inflation are lower.

Question

Quizplus · Accepted Answer

When aggregate demand shifts right along the aggregate supply curve, it leads to an increase in both price level and output. This causes higher inflation but lower unemployment, as the increase in output creates job opportunities and reduces the number of unemployed workers. Therefore, only option B is correct.

As Aggregate Demand Shifts Right Along the Aggregate Supply Curve