AD - AS Shocks

Multiple Choice

AD - AS Shocks
-On the graph above,suppose point G is on the short-run aggregate supply curve π = 2.5 + 2 × (Y - 22) and aggregate demand curve Y = 29.25 - 0.5π.If output at point G is 25,and inflation expectations are adaptive,then the inflation rate next period will be ________.

A) 11.5
B) 14.5
C) 8.5
D) 2.5
E) none of the above