Demand-pull inflation is illustrated in the short run aggregate supply-aggregate demand model as a shift of the aggregate:
A) Supply to the right
B) Supply to the left
C) Demand to the right
D) Demand to the left

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when there is an increase in demand for goods and services, which leads to an increase in prices. In the short run aggregate supply-aggregate demand model, this is illustrated by a shift of the aggregate demand curve to the right. This is because the increase in demand leads to an increase in the equilibrium price level and output, resulting in inflation. Therefore, the correct answer is C, which represents a shift of the aggregate demand curve to the right.

Demand-Pull Inflation Is Illustrated in the Short Run Aggregate Supply-Aggregate