During a Demand-Pull Inflation, If the Fed Tries to Maintain

question 311

Multiple Choice

During a demand-pull inflation, if the Fed tries to maintain a level of real GDP above potential GDP,

• A) the SAS curve will shift leftward continuously and the AD curve will not shift.
• B) the AD curve will shift rightward continuously and SAS curves will shift leftward continuously.
• C) the AD curve will shift rightward continuously and the SAS curve will not shift.
• D) there will be a one-time shift in the AD and the SAS curves.

---

Definitions:

Differential Analysis

A decision-making technique that focuses on the cost and revenue differences between alternative business decisions.

Relevant Costs

Costs that are directly associated with a specific decision and will change based on the outcome of that decision.

Alternatives

Different options or strategies that can be considered or chosen in decision-making processes.

Quantitative Terms

Conditions or parameters that can be measured and quantified, often used in contracts and agreements.