When the aggregate demand curve shifts to the right,intersecting the aggregate supply curve on its upward-sloping or vertical segment,
A) demand-pull inflation occurs.
B) cost-push inflation occurs.
C) stagflation occurs.
D) deflation occurs.
E) the shift pulls the price level down.

Question

Quizplus · Accepted Answer

The intersection of the aggregate demand and aggregate supply curves on the upward-sloping or vertical segment indicates that there is an increase in both output and the price level. This situation is consistent with demand-pull inflation, which occurs when the increase in aggregate demand surpasses the economy's capacity to produce goods and services, pushing prices upward. Therefore, the correct answer is A.

When the Aggregate Demand Curve Shifts to the Right,intersecting the Aggregate