Short-run movements in inflation and output are ultimately attributed to changes in:
A)Aggregate demand
B)Aggregate supply
C)Changes in foreign policy
D)Aggregate demand and aggregate supply

Question

Quizplus · Accepted Answer

Short-run movements in inflation and output are ultimately attributed to changes in both aggregate demand and aggregate supply. Changes in aggregate demand can result from shifts in consumer and business confidence, changes in government policies, and changes in foreign economic conditions. Changes in aggregate supply can result from fluctuations in production costs, changes in technology, and changes in input prices. Therefore, both aggregate demand and aggregate supply play a role in short-run fluctuations in inflation and output.

Short-Run Movements in Inflation and Output Are Ultimately Attributed to Changes