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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 demand-pull inflation would be represented by a shift from:

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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 demand-pull inflation would be represented by a shift from:

Quizplus · Accepted Answer

A demand-pull inflation would occur when there is an increase in aggregate demand (AD). This would result in a shift in the AD curve from AD₁ to AD₂, causing an increase in both output and the price level. Choices B, C, and D are incorrect because they involve shifts in the wrong curves or in the wrong direction.

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