Narrbegin Exhibit 14.2 Aggregate demand and supply -In Exhibit 14.2, 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.

Question

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When aggregate demand shifts from AD₄ to AD₅, it indicates an increase in demand for goods and services, which leads to an increase in prices due to the shortage of supply. This results in demand-pull inflation.