Refer to the information provided in Figure 27.4 below to answer the question(s) that follow. Figure 27.4
-Refer to Figure 27.4. If the economy is currently at the intersection of AS and AD, a decrease in AS with no change in AD will cause
A) deflation.
B) stagflation.
C) economic growth.
D) deflationary growth.

Question

Refer to the information provided in Figure 27.4 below to answer the question(s) that follow.  Figure 27.4
-Refer to Figure 27.4. If the economy is currently at the intersection of AS and AD, a decrease in AS with no change in AD will cause
A) deflation. 
B) stagflation. 
C) economic growth. 
D) deflationary growth.

Quizplus · Accepted Answer

A decrease in AS with no change in AD will cause stagflation, which is a combination of inflation and stagnant economic growth. This is because the decrease in AS leads to higher prices (inflation), but lower output and employment (stagnant economic growth).

Refer to the Information Provided in Figure 27