Consider the AD/AS Model Below with a Constant Rate of Inflation.No

question 113

Multiple Choice

Consider the AD/AS model below with a constant rate of inflation.No exogenous AD or AS shocks are occurring. FIGURE 29-1 Refer to Figure 29-1.What explains the movement of the AD curve from AD₀ to AD₁ to AD₂ and so on?

• A)Increasing nominal wages causes desired consumption to increase,shifting the AD curve to the right.
• B)Desired investment is increasing,shifting the AD curve to the right.
• C)The central bank is attempting to reduce inflation by removing monetary validation.
• D)The process of disinflation
• E)The central bank is increasing the money supply and validating the inflationary expectations.

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