Use the following to answer questions :
Exhibit: AD-AS Shifts

-(Exhibit: AD-AS Shifts) Starting from long-run equilibrium at A with output equal to Y and the price level equal to P₁,a cost-push inflation would be represented by a shift from:

Question

Use the following to answer questions :
Exhibit: AD-AS Shifts

-(Exhibit: AD-AS Shifts) Starting from long-run equilibrium at A with output equal to Y and the price level equal to P₁,a cost-push inflation would be represented by a shift from:

Quizplus · Accepted Answer

A cost-push inflation is caused by an increase in the cost of production, which shifts the aggregate supply (AS) curve to the left. Therefore, the correct answer is C, as it shows a shift in the AS curve from AS₁ to AS₂.

Use the Following to Answer Questions