Refer to the above figure. If the aggregate demand curve shifts beyond AD5, then the economy will experience
A) demand-pull inflation.
B) cost-push inflation.
C) structural inflation.
D) stagflation.

Question

Quizplus · Accepted Answer

If the aggregate demand curve shifts beyond AD5, it means that there is an increase in demand for goods and services in the economy. This will result in a situation known as demand-pull inflation, where the overall price level in the economy increases due to a higher demand for goods and services than the supply can keep up with, causing an increase in prices. Therefore, the best choice is A, demand-pull inflation.

Refer to the Above Figure