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.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.