-Refer to the Above Diagram

question 2

Multiple Choice

-Refer to the above diagram.The initial aggregate demand curve is AD₁ and the initial aggregate supply curve is AS₁.Demand-pull inflation in the short run is best shown as:

• A) a shift of the aggregate demand curve from AD₁ to AD₂.
• B) a move from d to b to a.
• C) a move directly from d to a.
• D) a shift of the aggregate supply curve from AS₁ to AS₂.

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Definitions:

Payback Analysis

A financial analysis method used to determine the time required to recoup the cost of an investment or project.

NPV

An evaluation method used to assess the profitability of an investment by calculating the difference between its current cash inflows and outflows, discounted to their present values.

IRR

Internal Rate of Return represents a financial measure for assessing the potential profitability of investments.