If the Aggregate Demand Curve Shifts Rightward

question 28

Multiple Choice

If the aggregate demand curve shifts rightward,

• A)the price level increases and output decreases
• B)the resulting increase in the price level is usually called cost-push inflation
• C)the resulting increase in the price level is usually called demand-pull inflation
• D)the price level increases only if there is also a leftward shift of the aggregate supply curve
• E)the price level decreases and output decreases

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Definitions:

Money Demand

The desired holding of financial assets in the form of money, which varies inversely with the interest rate.

Price Level

The economy-wide current average price for its entire range of goods and services.

Supply of Money

The total amount of money available in an economy at a specific time, including currency and deposits.

Value of Money

The purchasing power of monetary units, indicating how much goods or services one unit of money can buy; it generally decreases with inflation.