Exhibit 7-1 -In Exhibit 7-1 the economy is initially facing AD 0 and AS 0 .Which of the following best describes the occurance of cost-push deflation?

Cost-push deflation occurs when the aggregate supply curve shifts to the right (AS 2 ), leading to lower price levels while output increases.

Exhibit 7-1 -In Exhibit 7-1 the economy is initially facing AD 0 and AS 0 .Which of the following best describes the occurance of cost-push deflation?

Cost-push deflation occurs when the aggregate supply curve shifts to the right (AS 2 ), leading to lower price levels while output increases.

Solved

Exhibit 7-1 -In Exhibit 7-1 the Economy Is Initially Facing AD₀and

Question 114

Multiple Choice

Exhibit 7-1
-In Exhibit 7-1 the economy is initially facing AD₀and AS₀.Which of the following best describes the occurance of cost-push deflation?

A) The aggregate demand curve shifts to AD₁.
B) The agregate supply curve shifts to AS₁.
C) The aggregate demand curve shifts to AD₁ and the aggregate supply curve shifts to AS₁.
D) The aggregate demand curve shifts to AD₂.
E) The aggregate supply curve shifts to AS₂.

Correct Answer: