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

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.What explains the movement of the AD curve from AD₀ to AD₁ to AD₂ and so on?

A) Increasing nominal wages causes desired consumption to increase,shifting the AD curve to the right.
B) Desired investment is increasing,shifting the AD curve to the right.
C) The central bank is attempting to reduce inflation by removing monetary validation.
D) The process of disinflation
E) The central bank is increasing the money supply and validating the inflationary expectations.