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-An Economy Is at Potential GDP and the Price Level

Question 38

Multiple Choice

-An economy is at potential GDP and the price level is 100 in the figure above. If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD<sub>1</sub>, in the short run the inflation rate is A) 0 percent a year. B) 10 percent a year. C) 20 percent a year. D) More than 20 percent a year.
-An economy is at potential GDP and the price level is 100 in the figure above. If aggregate demand unexpectedly increases so that the aggregate demand curve shifts to AD1, in the short run the inflation rate is


A) 0 percent a year.
B) 10 percent a year.
C) 20 percent a year.
D) More than 20 percent a year.

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