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

question 89

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.Assume there are no demand or supply shocks present in this analysis.What explains the movement of the AS curve from to to and so on?

• A)unit costs are rising due to excess demand for labour
• B)expectations of inflation are causing wage costs to rise continually
• C)unit costs are rising because real wages are rising faster than nominal wages
• D)expectations of inflation are causing a perpetual inflationary output gap
• E)the AS curve shifts up as potential GDP (Y*)is continuously rising

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Definitions:

Distribution

The process of making goods or services available to consumers through various channels.

Downstream Activity

Processes in the supply chain that occur after the production phase, such as distribution, marketing, and sales to the end consumer.

SCM

Supply Chain Management, the handling of the entire production flow of a good or service — from the raw components all the way to delivering the final product to the consumer.

Customer Demand

The desire of purchasers, consumers, clients, or end-users to buy goods or services in a given timeframe at a specific price.