Graphically, the full-employment, low-inﬂation, rapid-growth economy of the last half of the 1990s is depicted by a
A) rightward shift of the aggregate demand curve along a ﬁxed aggregate supply curve.
B) rightward shift of the aggregate supply curve along a ﬁxed aggregate demand curve.
C) rightward shift of the aggregate demand curve and a rightward shift of the aggregate supply curve.
D) leftward shift of the aggregate demand curve and a leftward shift of the aggregate supply curve.

Question

Quizplus · Accepted Answer

The full-employment, low-inﬂation, rapid-growth economy of the last half of the 1990s is represented by an increase in both aggregate demand and aggregate supply. This can be shown graphically as a rightward shift of both the aggregate demand and aggregate supply curves, leading to an increase in real GDP and a decrease in the price level. Therefore, the correct answer is C.

Graphically, the Full-Employment, Low-Inﬂation, Rapid-Growth Economy of the Last Half