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

question 60

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.A constant rate of inflation of 3% is portrayed in an AD/AS diagram like this one as

• A)an annual shift upward of the AD curve by 3%.
• B)an annual shift upward of the AS curve by 3%.
• C)an annual increase in the inflation rate of 3%.
• D)an annual increase in the equilibrium price level of 3%.
• E)Not applicable.The diagram shows the price level,not the inflation rate.

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