Demand-pull inflation starts with a shift of the
A)AS curve rightward.
B)AD curve rightward.
C)AS curve leftward.
D)AD curve leftward.
E)potential GDP line leftward.

Question

Quizplus · Accepted Answer

Demand-pull inflation occurs when aggregate demand shifts rightward, causing an increase in both price level and output level. This is represented by a shift in the AD curve rightward. A leftward shift in the AS curve would represent a decrease in output level, while a rightward shift in the AS curve would represent an increase in output level. The potential GDP line represents the economy's maximum sustainable output level, and a leftward shift in this line would represent a decrease in the economy's potential output.

Demand-Pull Inflation Starts with a Shift of the