Refer to the information provided in Figure 13.4 below to answer the questions that follow.
Figure 13.4
-Refer to Figure 13.4.Stagflation would NOT be caused by a
A)decrease in AS.
B)higher price level with lower output.
C)higher price level with higher unemployment.
D)shift to the right of AD.

Question

Refer to the information provided in Figure 13.4 below to answer the questions that follow.
  Figure 13.4
-Refer to Figure 13.4.Stagflation would NOT be caused by a
A)decrease in AS. 
B)higher price level with lower output. 
C)higher price level with higher unemployment. 
D)shift to the right of AD.

Quizplus · Accepted Answer

Stagflation is a situation characterized by high inflation and high unemployment. This can occur when there is a decrease in AS, causing prices to rise due to a decrease in output. Similarly, a higher price level with lower output (option B) can also contribute to stagflation. However, a shift to the right of AD (option D) would cause an increase in output and employment, which is inconsistent with the definition of stagflation. Option C also describes a situation of high prices and high unemployment, but it does not provide information on the level of output, so it cannot be conclusively identified as a cause of stagflation.

Refer to the Information Provided in Figure 13