-Refer to the above graph.Given that the economy is at an initial equilibrium where the AD₁ and AS₁ curves intersect,demand-pull inflation in the short run can best be represented by a shift from:

Question

-Refer to the above graph.Given that the economy is at an initial equilibrium where the AD<sub>1</sub> and AS<sub>1</sub> curves intersect,demand-pull inflation in the short run can best be represented by a shift from: A) AS<sub>1</sub> to AS<sub>3</sub>. B) AD<sub>1</sub> to AD<sub>2</sub>. C) AS<sub>1</sub> to AS<sub>2</sub>. D) AD<sub>2</sub> to AD<sub>1</sub>.

Quizplus · Accepted Answer

Demand-pull inflation occurs when there is an increase in aggregate demand, which shifts the AD curve to the right. In the graph, this is represented by a shift from AD1 to AD2.

-Refer to the Above Graph