Given an upward-sloping aggregate supply curve,attempts to reduce unemployment through monetary policy will aggravate current inflation as illustrated by a:
A) Leftward shift of aggregate demand.
B) Rightward shift of aggregate demand.
C) Leftward shift of aggregate supply.
D) Rightward shift of aggregate supply.

Question

Quizplus · Accepted Answer

A rightward shift of aggregate demand, resulting from expansionary monetary policy, increases the overall demand for goods and services. This can lead to higher prices, thus aggravating inflation, especially when the aggregate supply curve is upward sloping, indicating that increases in demand lead to increases in prices.

Given an Upward-Sloping Aggregate Supply Curve,attempts to Reduce Unemployment Through