12.3 Shocks to the System Refer to the information provided in Figure 12.3 below to answer the questions that follow. Figure 12.3 -Refer to Figure 12.3. Cost-push inflation occurs if A) the economy moves from Point A to Point B on aggregate supply curve AS₁. B) the economy moves from Point A to Point C on the aggregate supply curve AS₁. C) the aggregate supply curve shifts from AS₁ to AS₀. D) the aggregate supply curve shifts from AS₁ to AS₂.

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when the aggregate supply curve shifts leftward, such as from AS₁ to AS₂, indicating a decrease in supply leading to higher prices.