-An Economy Is in Long-Run Equilibrium and the Price Level

Multiple Choice

-An economy is in long-run equilibrium and the price level is 100 in the figure above. Aggregate demand increases and the aggregate demand curve shifts to AD?. If the increase in aggregate demand is expected, then 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