Aggregate Demand in India Increased in 2008

question 204

Multiple Choice

Aggregate demand in India increased in 2008. In addition, real GDP grew strongly and inflation approached 10 percent. The best explanation for this inflation is that

• A) aggregate supply did not change.
• B) potential GDP increased, but at a slower rate than aggregate demand.
• C) there was a movement up along the aggregate demand curve in 2008.
• D) potential GDP decreased.

---

Definitions:

Forethought

The act of thinking or planning about the future beforehand.

Anticipate

To expect or predict something before it happens.

Guide

Directions or instructions meant to assist or lead a user towards a specific goal, often found in manuals or tutorial formats.

Color Red

A primary color perceived when light with a predominant wavelength of roughly 620–750 nanometers is directed to the eyes.