If Demand Pull Inflation Occurs When the Economy Is Already

question 55

Multiple Choice

If demand pull inflation occurs when the economy is already at potential GDP, then following the initial increase in aggregate demand, the

• A)AS curve shifts rightward.
• B)potential GDP line shifts rightward.
• C)AS curve shifts leftward.
• D)potential GDP line shifts leftward.
• E)None of the above are correct because demand-pull inflation shifts only the aggregate demand curve.

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