-Refer to the above diagram.The initial aggregate demand curve is AD₁ and the initial aggregate supply curve is AS₁.Cost-push inflation in the short run is best represented as a: A) leftward shift of the aggregate supply curve from AS₁ to AS₂. B) rightward shift of the aggregate demand curve from AD₁ to AD₂. C) move from d to b to a. D) move from d directly to a.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when the aggregate supply curve shifts leftward, indicating a decrease in supply due to increased production costs, leading to higher prices.

-Refer to the Above Diagram