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Refer to the Above Diagram

Question 1

Multiple Choice

Refer to the above diagram.The initial aggregate demand curve is AD<sub>1</sub> and the initial aggregate supply curve is AS<sub>1</sub>.In the long run, demand-pull inflation is best shown as: A) a shift of aggregate demand from AD<sub>1</sub> to AD<sub>2</sub> followed by a shift of aggregate supply from AS<sub>1</sub> to AS<sub>2</sub>. B) a move from d to b to a. C) a shift of aggregate supply from AS<sub>1</sub> to AS<sub>2</sub> followed by a shift of aggregate demand from AD<sub>1</sub> to AD<sub>2</sub>. D) a move from a to d. Refer to the above diagram.The initial aggregate demand curve is AD1 and the initial aggregate supply curve is AS1.In the long run, demand-pull inflation is best shown as:


A) a shift of aggregate demand from AD1 to AD2 followed by a shift of aggregate supply from AS1 to AS2.
B) a move from d to b to a.
C) a shift of aggregate supply from AS1 to AS2 followed by a shift of aggregate demand from AD1 to AD2.
D) a move from a to d.

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